Private public distinction of the target and the long run operating performance of acquirers

Article

Shams, Syed M. M. and Gunasekarage, Abeyratna. 2016. "Private public distinction of the target and the long run operating performance of acquirers." Pacific Accounting Review. 28 (1), pp. 38-58. https://doi.org/10.1108/PAR-02-2014-0004
Article Title

Private public distinction of the target and the long run operating performance of acquirers

ERA Journal ID19114
Article CategoryArticle
AuthorsShams, Syed M. M. (Author) and Gunasekarage, Abeyratna (Author)
Journal TitlePacific Accounting Review
Journal Citation28 (1), pp. 38-58
Number of Pages21
Year2016
ISSN0114-0582
Digital Object Identifier (DOI)https://doi.org/10.1108/PAR-02-2014-0004
Web Address (URL)http://www.emeraldinsight.com/doi/full/10.1108/PAR-02-2014-0004
Abstract

Purpose
– The purpose of this study is to examine whether the acquirers of private targets outperform their peers that acquire public targets in the long run.

Design/methodology/approach
– Using two samples of acquirers of private and public targets, this paper analyses their short-run market performance and long-run operating performance. Univariate analyses and multiple regressions are used to analyse abnormal stock returns and abnormal cash flow performances of bidders.

Findings
– Acquirers of private targets earn significantly higher abnormal return than acquirers of public targets during the announcement period. Similarly, the long-run operating performance of acquirers of private targets is significantly higher than that of the acquirers of public targets. However, the performance difference between two groups is more pronounced when cash flows are scaled by the market value of acquirers.

Originality/value
– This is the first Australian study to examine whether the long-run operating performance of acquirers depends on the organisational form of the target acquired.

Keywordslong-term operating performance, industry, size and performance-adjusted cash flow return, mergers and acquisitions, acquirers of public targets, acquirers of private targets, abnormal return
ANZSRC Field of Research 2020350202. Finance
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Byline AffiliationsSchool of Commerce
Monash University
Institution of OriginUniversity of Southern Queensland
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