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Author: | Sudarsanam, S. Mahate, A. A. |
Title: | Glamour Acquirers, Method of Payment and Post- Acquisition Performance: The UK Evidence |
Journal: | Journal of Business Finance and Accounting
2003 : JAN-MAR, VOL. 30:1-2, p. 299-342 |
Index terms: | MERGERS MERGERS PERFORMANCE APPRAISAL PAYMENT SYSTEMS |
Language: | eng |
Abstract: | The authors study the effect of different acquirer types, defined by financial status and their payment methods, on their short and long-term performance, in terms of abnormal returns using a variety of benchmark models. For a sample of 519 UK acquirers during 1983-95, the authors examine the abnormal return performance of acquirers based on their pre-bid financial status as either glamour or value acquirers using both the price to earnings (PE) ratio and market to book value ratio (MTBV). Value acquirers outperform glamour acquirers in the three-year post-acquisition period. One interpretation is that glamour firms have overvalued equity and tend to exploit their status and use it more often than cash to finance their acquisitions. |
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