Premium
Do Managerial Objectives Drive Bad Acquisitions?
Author(s) -
MORCK RANDALL,
SHLEIFER ANDREI,
VISHNY ROBERT W.
Publication year - 1990
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/j.1540-6261.1990.tb05079.x
Subject(s) - bidding , shareholder , business , sample (material) , mergers and acquisitions , finance , accounting , marketing , corporate governance , chemistry , chromatography
In a sample of 326 US acquisitions between 1975 and 1987, three types of acquisitions have systematically lower and predominantly negative announcement period returns to bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when its managers performed poorly before the acquisition. These results suggest that managerial objectives may drive acquisitions that reduce bidding firms' values.