Journal of Financial and Quantitative Analysis Vol. 50 No. 3 2015
The Post-Acquisition Returns of Stock Deals: Evidence of the Pervasiveness of the Asset Growth Effect
Abstract
A growing literature finds that firm asset growth rates are negatively correlated with subsequent stock returns. We show that the poor post-deal returns that have been documented for stock acquisitions are more precisely explained by the return effects associated with systematically larger asset growth rates for stock deals. We find a similar result for other cross-sectional and time-series acquisition effects, including poor returns for glamour deals, weakly monitored deals, and deals done during high-valuation periods. We suggest that the distinguishing characteristic associated with poor performing acquisitions is simply their tendency to grow assets.
- DOI
- 10.1017/s0022109015000150
- Volume
- 50
- Issue
- 3
- Pages
- 477-507
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref