The impact of market cycle on the performance of Singapore acquirers

Nitin Pangarkar · Junius R. Lie

41 citations0/0 files storedStrategic Management Journal

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Corporate Finance and Governance Financial Markets and Investment Strategies International Business and FDI

Abstract

Abstract In this paper, we hypothesize that acquisitions undertaken during low market cycles will exhibit better performance than other acquisitions for two key reasons: lower likelihood of overpayment due to hubris and ease in implementing restructuring initiatives such as retrenchment. We define performance as the cumulative abnormal returns surrounding the acquisition event and deploy a trend‐based measure for market cycle. Based on an analysis of 115 acquisitions by Singapore firms between 1990 and 1999, we find strong support for the hypothesized relationship. Copyright © 2004 John Wiley & Sons, Ltd.

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1983The market for corporate control 1986The Hubris Hypothesis of Corporate Takeovers 1997Why Focused Strategies May Be Wrong for Emerging Markets 1992Valuation: Measuring and managing the value of companies 1988POLITICS OF STRATEGIC DECISION MAKING IN HIGH-VELOCITY ENVIRONMENTS: TOWARD A MIDRANGE THEORY.1997Explaining the Premiums Paid for Large Acquisitions: Evidence of CEO Hubris 1988Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms 2000Do firms learn to create value? The case of alliances

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2017The financial crisis, acquisition premiums and the moderating effect of CEO power 2016MERGERS AND ACQUISITIONS: EVIDENCE ON POST-ANNOUNCEMENT PERFORMANCE FROM CEE STOCK MARKETS 2014Role of industry relatedness in performance of Indian acquirers—Long and short run effects

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