Serial acquirers and decreasing returns: Do bidders’ acquisition patterns matter?
Corresponding Author
Thibaut G. Morillon
Department of Finance, Elon University, North Carolina, USA
Correspondence
Thibaut G. Morillon, Koury Business Center, Elon University, 2075 Campus box Elon, NC 27244.
Email: tmorillon@elon.edu
Search for more papers by this authorCorresponding Author
Thibaut G. Morillon
Department of Finance, Elon University, North Carolina, USA
Correspondence
Thibaut G. Morillon, Koury Business Center, Elon University, 2075 Campus box Elon, NC 27244.
Email: tmorillon@elon.edu
Search for more papers by this authorAbstract
This paper examines the phenomenon of declining announcement returns of serial acquirers. Using a classification of acquirers based on their patterns of acquisition, I find that decreasing returns occur mostly within “blocks” of acquisitions. This trend is driven by bidders who acquire targets quickly in chunks. In contrast, I find no evidence of any such decline in returns for the most active acquirers in the market of corporate control. I test several theories proposed by the prior literature to explain declining returns and find evidence consistent with temporary overvaluation, agency costs, and bidder learning as likely drivers.
CONFLICT OF INTEREST
The author declares no conflict of interest.
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