Performance effects of acquisitions and divestitures: A comparative study of the top acquiring firms and the top divesting firms (1983--1997).

摘要

The purpose of this research paper is to provide a thorough analysis of the long-run post merger performance of the acquiring firms and the long-run post divestiture performance of the divesting firms. The study tracks the performance of the two groups of firms over three five-year periods—the mid-eighties, the late eighties-early nineties, and the mid-nineties.; As expected, the top acquiring firms grew at higher rates (total assets and sales) than the top divesting firms during the mid-eighties. But their growth rate for operating income was lower than the top divesting firms (not significant). On the return front, the top acquiring firms outperformed the top divesting firms on all of the return variables—return on sales (ROS), return on assets (ROA), and return on equity (ROE). Two of these results (ROA and ROE) are statistically significant.; During the late eighties-early nineties the top acquiring firms performed better than the top divesting firms on majority of the return variables (not significant). Very similar results are observed for the mid-nineties. The time series analysis indicates better performance for the top acquiring firms during the mid-eighties than during the late eighties - early nineties or during the mid-nineties (some significant). But the time series analysis indicates worse performance for the top divesting firms during the mid-eighties than during the late eighties - early nineties or during the mid-nineties (not significant).; The top acquiring firms outperformed their industries on all of the return variables during all the periods (some significant). But the top divesting firms underperformed their industries on most of the return variables (not significant). Finally, it is observed from long-horizon stock market returns study that both the top acquiring firms and the top divesting firms underperformed as compared to their industry-and-size-matched control firms during the post acquisitions or post divestitures sixty-month period. But this underperformance is not at all statistically significant.