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    Mulherin, J. Harold Netter, Jeffry M. and Poulsen, Annette B. 2017. Vol. 1, Issue. , p. 235.
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The Post-Acquisition Returns of Stock Deals: Evidence of the Pervasiveness of the Asset Growth Effect

  • Sandra Mortal (a1) and Michael J. Schill (a2)
Abstract

A growing literature finds that firm asset growth rates are negatively correlated with subsequent stock returns. We show that the poor post-deal returns that have been documented for stock acquisitions are more precisely explained by the return effects associated with systematically larger asset growth rates for stock deals. We find a similar result for other cross-sectional and time-series acquisition effects, including poor returns for glamour deals, weakly monitored deals, and deals done during high-valuation periods. We suggest that the distinguishing characteristic associated with poor performing acquisitions is simply their tendency to grow assets.

Copyright
COPYRIGHT: © Michael G. Foster School of Business, University of Washington 2015 
Corresponding author
*Corresponding author: schill@virginia.edu
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