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Journal of Financial Economics Vol. 73 No. 2 2004

Firm size and the gains from acquisitions

Sara B. Moeller1; Frederik P. Schlingemann2; René M. Stulz3,4

1 Southern Methodist University · 2 University of Pittsburgh · 3 Fisher College · 4 The Ohio State University

Abstract

We examine a sample of 12,023 acquisitions by public firms from 1980 to 2001. The equally weighted abnormal announcement return is 1.1%, but acquiring-firm shareholders lose $25.2 million on average upon announcement. This disparity suggests the existence of a size effect in acquisition announcement returns. The announcement return for acquiring-firm shareholders is roughly two percentage points higher for small acquirers irrespective of the form of financing and whether the acquired firm is public or private. The size effect is robust to firm and deal characteristics, and it is not reversed over time.

DOI
10.1016/j.jfineco.2003.07.002
Volume
73
Issue
2
Pages
201-228
Language
en
Sources
crossref openalex bibtex:phds-export.bib

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