Premium
When do acquirers earn abnormal returns?
Author(s) -
Capron Laurence,
Pistre Nathalie
Publication year - 2002
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.262
Subject(s) - business , value (mathematics) , event study , value creation , sample (material) , resource (disambiguation) , mergers and acquisitions , abnormal return , monetary economics , economics , industrial organization , finance , statistics , mathematics , computer science , paleontology , computer network , context (archaeology) , chemistry , chromatography , stock exchange , biology
In this study, we explore the conditions under which acquirers earn abnormal returns. We provide an empirical test of Barney and Chatterjee's arguments by examining the role of the respective resource contribution of the target and the acquirer. Combining an event study with a survey of postacquisition resource transfer on a sample of 101 horizontal acquisitions, we find that acquirers do not earn abnormal returns when they only receive resources from the target. In this case, it is likely that multiple bidders, which could have equally captured these resources, competed away all the abnormal returns from the successful bidder. In contrast, we find that acquirers can expect to earn abnormal returns when they transfer their own resources to the target. Overall, we find that value creation does not ensure value capture for the acquirer. Copyright © 2002 John Wiley & Sons, Ltd.