Do Managerial Objectives Drive Bad Acquisitions?

Randall Morck, Andrei Shleifer and Robert Vishny

Journal of Finance, 1990, vol. 45, issue 1, 31-48

Abstract: In a sample of 326 U.S. acquisitions between 1975 and 1987, three types of acquisitions have systematically lower and predominantly negative announcement period returns to bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when its managers performed poorly before the acquisition. These results suggest that managerial objectives may drive acquisitions that reduce bidding firms' values. Copyright 1990 by American Finance Association.

Date: 1990
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Working Paper: Do Managerial Objectives Drive Bad Acquisitions? (1990)
Working Paper: Do Managerial Objectives Drive Bad Acquisitions? (1989)
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