Private public distinction of the target and the long run operating performance of acquirers

Syed M.M. Shams, Abeyratna Gunasekarage

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

Purpose – The purpose of this study is to examine whether the acquirers of private targets outperform their peers that acquire public targets in the long run. Design/methodology/approach – Using two samples of acquirers of private and public targets, this paper analyses their short-run market performance and long-run operating performance. Univariate analyses and multiple regressions are used to analyse abnormal stock returns and abnormal cash flow performances of bidders. Findings – Acquirers of private targets earn significantly higher abnormal return than acquirers of public targets during the announcement period. Similarly, the long-run operating performance of acquirers of private targets is significantly higher than that of the acquirers of public targets. However, the performance difference between two groups is more pronounced when cash flows are scaled by the market value of acquirers. Originality/value – This is the first Australian study to examine whether the long-run operating performance of acquirers depends on the organisational form of the target acquired.

Original languageEnglish
Pages (from-to)38-58
Number of pages21
JournalPacific Accounting Review
Volume28
Issue number1
DOIs
Publication statusPublished - 1 Feb 2016

Keywords

  • Abnormal return
  • Acquirers of private targets
  • Acquirers of public targets
  • Industry
  • Long-term operating performance
  • Mergers and acquisitions
  • Size and performance-adjusted cash flow return

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