Do Managerial Objectives Drive Bad Acquisitions?

Randall Morck, Andrei Shleifer and Robert Vishny

No 3000, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper documents for a sample of 327 US acquisitions between 1975 and 1987 three forces that systematically reduce the announcement day return of bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target , and when the performance of its managers has been poor before the acquisition. These results are consistent with the proposition that managerial rather than shareholders' objectives drive bad acquisitions.

Date: 1989-06
Note: ME
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Citations: View citations in EconPapers (5)

Published as Journal of Finance, March 1990.

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Journal Article: Do Managerial Objectives Drive Bad Acquisitions? (1990)
Working Paper: Do Managerial Objectives Drive Bad Acquisitions? (1990)
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