The sources of value destruction in acquisitions by entrenched managers

DC FieldValueLanguage
dc.contributor.authorHarford, Jarrad-
dc.contributor.authorHumphery-Jenner, Mark-
dc.contributor.authorPowell, Ronan-
dc.date.accessioned2016-02-10T11:06:13Z-
dc.date.available2016-02-10T11:06:13Z-
dc.date.copyright2012 Elsevieren
dc.date.issued2012-11-
dc.identifier.citationJournal of Financial Economicsen
dc.identifier.urihttp://hdl.handle.net/10197/7478-
dc.description.abstractPrior work has established that entrenched managers make value-decreasing acquisitions. In this study, we determine how they destroy that value. Overall, we find that value destruction by entrenched managers comes from a combination of factors. First, they disproportionately avoid private targets, which have been shown to be generally associated with value creation. Second, when they do buy private targets or public targets with blockholders, they tend not to use all-equity offers, which has the effect of avoiding the transfer of a valuable blockholder to the bidder. We further test whether entrenched managers simply overpay for good targets or choose targets with lower synergies. We find that while they overpay, they also choose low synergy targets in the first place, as shown by combined announcement returns and post-merger operating performance.en
dc.language.isoenen
dc.publisherElsevieren
dc.rightsThis is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics (VOL 106, ISSUE 2, (2012)) DOI: 10.1016/j.jfineco.2012.05.016.en
dc.subjectCorporate governance; Mergers; Entrenchment; Blockholders; Overpaymenten
dc.subjectCorporate governanceen
dc.subjectMergersen
dc.subjectEntrenchmenten
dc.subjectBlockholdersen
dc.subjectOverpaymenten
dc.subject.classificationG34en
dc.subject.classificationG32en
dc.titleThe sources of value destruction in acquisitions by entrenched managersen
dc.typeJournal Articleen
dc.internal.authorcontactotherronan.powell@ucd.ie-
dc.statusPeer revieweden
dc.identifier.volume106en
dc.identifier.issue2en
dc.identifier.startpage247en
dc.identifier.endpage261en
dc.identifier.doi10.1016/j.jfineco.2012.05.016-
dc.neeo.contributorHarford|Jarrad|aut|-
dc.neeo.contributorHumphery-Jenner|Mark|aut|-
dc.neeo.contributorPowell|Ronan|aut|-
dc.internal.rmsid534359123-
dc.date.updated2015-11-16T12:39:39Z-
item.grantfulltextopen-
item.fulltextWith Fulltext-
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