Acquirer performance when founders remain in the firm

Yamin Xie

Pacific-Basin Finance Journal, 2015, vol. 35, issue PA, 273-297

Abstract: This study explores the impact of founders on acquirers' merger performance. The results show that the acquisition of founding firms has a relatively negative impact on acquirers' performance, whereas founders who remain in a firm post-merger have a relatively positive influence. Moreover, I find significant differences between the acquirers of firms where founders remain and the acquirers of firms where founders leave. The acquirers of firms in which founders remain exhibit a higher Tobin's q and greater cumulative abnormal returns. This phenomenon is more prominent when founders remain as daily executives than when founders remain as non-daily directors. Additionally, the length of time that the founders remain with the merged firm affects the findings. Finally, I document a robust positive relationship between the remaining founders and acquirers' value or stock returns, indicating the value of founders to acquirers.

Keywords: Merger performance; Founding firm; Remaining founders; q theory; Cumulative abnormal return (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 L26 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:35:y:2015:i:pa:p:273-297

DOI: 10.1016/j.pacfin.2015.01.006

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