Journal of Financial and Quantitative Analysis Vol. 53 No. 4 2018
Organization Capital and Mergers and Acquisitions
Abstract
Using a sample of completed U.S. acquisition deals over the period 1984–2014, we find that acquirer organization capital as measured by capitalized selling, general, and administrative (SG&A) expenses is associated with superior deal performance. We show that high organization-capital acquirers achieve significantly higher abnormal announcement period returns, and better post-merger operating and stock performance, than low organization-capital acquirers. Additional tests suggest a causal relation between acquirer organization capital and deal performance. We further show that post-merger, high organization-capital acquirers cut more on the cost of goods sold, invest more in SG&A expenses, and achieve greater asset turnover and innovative efficiency.
- DOI
- 10.1017/s0022109018000145
- Volume
- 53
- Issue
- 4
- Pages
- 1871-1909
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref