| Author: | Rau, P. R. Vermaelen, T. |
| Title: | Glamour, value and the post-acquisition performance of acquiring firms. |
| Journal: | Journal of Financial Economics
1998 : AUG, VOL. 49:2, p. 223-253 |
| Index terms: | Mergers Bidding |
| Language: | eng |
| Abstract: | The authors use a methodology robust to recent criticisms of standard long-horizon event study tests to show that bidders in mergers underperform while bidders in tender offers overperform in the three years after the acquisition. The long-term underperformance of acquiring firms in mergers is predominantly caused by the poor post-acquisition performance of low book-to- market firms. The authors interpret this finding as evidence that both the market and the management overextrapolate the bidder's past performance when they assess the desirability of an acquisition. |
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