Market Returns to Acquirers of Substantial Assets

Raymond Da Silva Rosa, T. Walter, T. Nguyen

Research output: Contribution to journalArticlepeer-review


Does poor post-acquisition performance characterise firms that make non-M&A acquisitions? We investigate the wealth effects of substantial asset acquisitions (i.e. acquisitions that cost over $10 million) on acquiring firms' shareholders. We find significant abnormal positive market reaction to asset acquisition announcements and contrary to findings for firms undertaking M&As, the acquiring firms perform exceptionally well post-acquisition. Our findings are robust to the research method weaknesses common to many studies of long-term performance and we control for free-cash-flow as well. Our results contradict the hubris hypothesis of acquisitions and lend weight to the argument that the auction-style process that characterizes corporate takeover bids contributes to overpayment.
Original languageEnglish
Pages (from-to)111-134
JournalAustralian Journal of Management
Issue numberSpecial Issue
Publication statusPublished - 2004


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