We examine the impact of merger announcements on
protfolios of acquiring firm and target firm common
stock from 1919 to 1930. despite vast changes in the
economic and regulatory environment, overall
acquisition profitability has remained remarkably
constant over the last 70 and 80 years. Target firm
shareholders in the 1920s clearly gained from
takeovers, averaging abnormal retruns in excess of
15%, while acquiring firm shareholders essentially
broke even. synergistic or monopolistic gains from
consolidation were minimal. Unlike the more recent
experience, target firm and acquiring firm abnormal
returns were largely unaffected by the mode of
acquisition, the means of financing, or the degree
of industrial relatedness.