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Merger strategies and stockholder value
Author(s) -
Lubatkin Michael
Publication year - 1987
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.4250080105
Subject(s) - shareholder , stock (firearms) , business , value (mathematics) , capital market , shareholder value , mergers and acquisitions , financial economics , economics , monetary economics , industrial organization , microeconomics , corporate governance , finance , computer science , mechanical engineering , machine learning , engineering
Acquisition literature suggests a relationship between stockholder gains and the relatedness of merging firms. This notion is tested by classifying mergers into four relatedness categories and by using measures of stockholder value as developed in the literature on capital markets. In all, stock returns of 439 acquiring firms in 1031 large mergers are examined, as are stock returns of 340 large acquired firms. The findings show that mergers lead to permanent gains in stockholder value for both acquiring and acquired firms' stockholders, but they do not support the popular prescription: ‘All things being equal, some product and market relatedness is better than none.’