On the Role of Acquisition Premium in Acquisition Research
Journal
Strategic Management Journal
ISSN
0143-2095
ISSN-Digital
1097-0266
Type
journal article
Date Issued
2007-12-01
Author(s)
Abstract
Several studies argue that paying high acquisition premia is value destroying for acquirer shareholders. There are studies that have even used the size of premium as a measure of low-quality decision making. This paper departs from the earlier research and shows that acquisition premia may be justified when target firms' resources are difficult for the market to value. An analysis of a sample of 458 acquisitions demonstrates that although higher premia are paid for R&D-related assets, the premia do not cause negative abnormal returns. Abnormal returns are more strongly affected by the overall target price levels independent of premia. Copyright © 2007 John Wiley & Sons, Ltd.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Wiley
Publisher place
Chichester [u.a.]
Volume
28
Number
13
Start page
1359
End page
1369
Pages
11
Subject(s)
Division(s)
Eprints ID
219938