Do investors value the acquirers’ complexity in a merger and acquisition?

Ying Pan, Ngoc Thuy Mai, Nguyen Nhut Vu Truong, Dien Giau Bui and Ruihai Li

International Review of Economics & Finance, 2025, vol. 99, issue C

Abstract: Our study explores the extent to which investors consider acquirers' complexity in evaluating the performance of mergers and acquisitions (M&A). We examined 1820 M&As in the US between 2002 and 2017 and found that acquirer complexity negatively impacts acquirer announcement returns. Higher levels of acquirer complexity diminish the synergy effect of acquisitions. Furthermore, our evidence suggests that this relationship is more pronounced when the acquiring firm has weaker corporate governance, lower compensation incentives, or more information asymmetry. Our study contributes to the M&A literature by highlighting the significance of acquirers' corporate structure on their M&A performance.

Keywords: Complexity; M&A performance; Corporate governance; Compensation incentives; Information asymmetry; Synergy (search for similar items in EconPapers)
JEL-codes: G30 G34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025001480

DOI: 10.1016/j.iref.2025.103985

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