On the relation between the relative size of acquisitions and the wealth of acquiring firms

There are dozens of studies in the mergers and acquisitions literature that include the relative size of an acquisition as an additive control variable in models explaining acquisition wealth effects. A majority of these studies document a positive coefficient estimate on relative size, but many doc...

Full description

Saved in:
Bibliographic Details
Published in:Applied economics letters 2013-04, Vol.20 (6), p.534-539
Main Authors: Jansen, Ivo Ph, Sanning, Lee W., Stuart, Nathan V.
Format: Article
Language:English
Subjects:
Abnormal returns
Acquisitions
Acquisitions & mergers
Applied economics
bidder
Economic analysis
Economic models
Mergers
relative size
Size of enterprise
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:There are dozens of studies in the mergers and acquisitions literature that include the relative size of an acquisition as an additive control variable in models explaining acquisition wealth effects. A majority of these studies document a positive coefficient estimate on relative size, but many document a negative coefficient estimate instead. Our study demonstrates that these seemingly contradictory findings stem from a misspecification of the functional form of the relation between Cumulative Abnormal Returns (CAR) and relative size.
ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2012.718056