Operating Performance Following Corporate Acquisitions: Does the Organisational Form of the Target Matter?

39 Pages Posted: 12 Aug 2014 Last revised: 28 Aug 2014

See all articles by Syed Shams

Syed Shams

University of Southern Queensland

Abey Gunasekarage

Monash University; Monash University

Multiple version iconThere are 2 versions of this paper

Date Written: August 11, 2014

Abstract

We compare long-run operating performances between acquirers of private targets and acquirers of public targets using samples of Australian acquisitions for the period 2000-2010. The acquirers of private targets realise statistically significant positive abnormal returns during the announcement period of completed acquisitions while acquirers of public targets earn normal returns. However, the operating performance of the former group during the post-acquisition period is not significantly different from that of the latter group. The stock-financed acquisitions are not associated with significant performance improvements irrespective of whether this method of payment is used to finance acquisitions of private or public targets. However, there is evidence to suggest that cash-financed acquisitions of public targets are associated with significant performance improvements while no such performance improvements were evident for cash-financed acquisitions of private targets. The concentrated ownership created through acquisitions of private targets is associated with significant improvement in the long-run operating performance for acquirers. Acquisitions of private targets are also associated with significant performance improvements if they are undertaken by experienced acquirers.

Keywords: Mergers and acquisitions, Acquirers of public targets, Acquirers of private targets, Abnormal return; Industry, size and performance-adjusted returns; Cash flow return

JEL Classification: G34, G12, G14

Suggested Citation

Shams, Syed and Gunasekarage, Abeyratna, Operating Performance Following Corporate Acquisitions: Does the Organisational Form of the Target Matter? (August 11, 2014). Available at SSRN: https://ssrn.com/abstract=2479118 or http://dx.doi.org/10.2139/ssrn.2479118

Syed Shams (Contact Author)

University of Southern Queensland ( email )

Sprinfield
Springfield
Springfield, Queensland 4300
Australia
+61734704551 (Phone)

Abeyratna Gunasekarage

Monash University ( email )

Building 11E
Clayton, Victoria 3800
Australia

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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