Journal article
Operating Performance and the Method of Payment in Takeovers
Journal of financial and quantitative analysis, Vol.37(1), pp.137-155
03/01/2002
DOI: 10.2307/3594998
Abstract
This study investigates the relation between the method of payment in acquisitions, earnings management, and operating performance for a large sample of firms that conducted acquisitions between 1985 and 1997. Prior to their acquisitions, acquirers exhibit levels of operating performance that exceed that of their respective industry peers. We find no evidence that acquirers manage their earnings prior to acquisitions, despite the possible incentives of managers who plan stock-based acquisitions to temporarily inflate their stock's purchasing power. Subsequent to acquisitions, acquirers continue to exhibit superior performance relative to their industry and experience significantly higher levels of operating performance than control firms with similar pre-event operating performance. Although the extant literature documents significant relations between the form of acquisition payment, announcement returns, and the post-acquisition excess return of acquirers, we find no evidence that the method of payment conveys information about the acquirer's future operating performance.
Details
- Title: Subtitle
- Operating Performance and the Method of Payment in Takeovers
- Creators
- Randall Heron - Indiana University – Purdue University IndianapolisErik Lie - William & Mary
- Resource Type
- Journal article
- Publication Details
- Journal of financial and quantitative analysis, Vol.37(1), pp.137-155
- Publisher
- Cambridge University Press
- DOI
- 10.2307/3594998
- ISSN
- 0022-1090
- eISSN
- 1756-6916
- Number of pages
- 19
- Language
- English
- Date published
- 03/01/2002
- Academic Unit
- Finance
- Record Identifier
- 9984380516702771
Metrics
1 Record Views