The impact of the announcement of acquisition of divested assets on buyers’ wealth - asset fit and disclosure of funds used: evidence from UK

Bala Balachandran, Robert Faff, Roger William Love, Andrew Menon

    Research output: Contribution to journalArticleResearchpeer-review

    Abstract

    This study examines the effects of announcements of acquisition of assets
    on shareholder wealth of buyers over the period January 2000 to December
    2002 in the U.K. Significant positive announcement period abnormal returns for
    ‘fit’ acquisitions of divested assets that disclosed the “sources of funds” are
    documented. Multivariate regression analysis shows that announcement period
    abnormal returns are significantly related to pre-announcement period abnormal
    returns, relative size of the acquisitions and disclosure of sources of funds.
    Overall, there is little or no support for the asset fit hypothesis. However, there
    is strong support for “Fund Source Disclosure”, “Fund Source Pecking-Order”
    and “Relative Size of Acquisition” Hypotheses
    Original languageEnglish
    Pages (from-to)219-240
    Number of pages22
    JournalMultinational Finance Journal
    Volume12
    Issue number3/4
    DOIs
    Publication statusPublished - 2008

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