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The Long-term Performance of Conglomerate and Non-Conglomerate Acquirers
Journal of Financial Studies
View Archive Info| Field | Value | |
| Title |
The Long-term Performance of Conglomerate and Non-Conglomerate Acquirers
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| Creator |
Junming Hsu
Tzu-Jung Hu Weiju Young |
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| Description |
This study investigates the long-run performance of 392 US cases of mergers and acquisitions (M&As). We define a conglomerate (non-conglomerate) M&A when the acquirer and target have different (the same) 2-digit SIC codes. Using Berger and Ofek's (1995) and Lamont and Polk's (2002) measures, we find that conglomerate acquirers are prone to underperform after M&As while non-conglomerate acquirers perform about the same as they did. These results are consistent with the argument that diversification mitigates the firm value. We also find that conglomerate and non-conglomerate acquirers' performance are associated with different M&A characteristics. Conglomerate acquirers' underperformance can be explained by managers' "hubris." On the other hand, non-conglomerate acquirers who paid cash tend to perform well after M&As, while those who buy high earnings-yield targets tend to perform poorly.Keywords: Conglomerate mergers and acquisitions, Diversification, Hubris, Means of payments
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| Publisher |
Journal of Financial Studies
財務金èžå¸åˆŠ |
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| Date |
2011-03-10
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| Identifier |
http://www.jfs.org.tw/index.php/jfs/article/view/2011080
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| Source |
Journal of Financial Studies; Vol 17, No 2 (2009); 163
財務金èžå¸åˆŠ; Vol 17, No 2 (2009); 163 |
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