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What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions
Author(s) -
Fuller Kathleen,
Netter Jeffry,
Stegemoller Mike
Publication year - 2002
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/1540-6261.00477
Subject(s) - shareholder , business , monetary economics , purchasing , market liquidity , stock (firearms) , market for corporate control , mergers and acquisitions , payment , finance , economics , corporate governance , marketing , mechanical engineering , engineering
We study shareholder returns for firms that acquired five or more public, private, and/or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market.