Learning from repetitive acquisitions: Evidence from the time between deals

Creators: Aktas, Nihat; de Bodt, Eric; Roll, Richard

Abstract

Knowledge gleaned from previous acquisitions may confer valuation expertise and other benefits. But numerous acquisitions also entail costs, due to problems of incorporating diverse units into an ever larger firm. Such benefits and costs are not directly observable from outside the firm. This article proposes a simple model to infer their relative importance, using the time between successive deals. The data requirements are minimal and allow the use of all mergers and acquisitions during 1992–2009 (more than 300,000 deals). The results provide evidence of learning gains through repetitive acquisitions, especially under CEO continuity and when successive deals are more similar.

Additional Information

© 2013 Elsevier B.V. Received 10 November 2011, Revised 12 June 2012, Accepted 13 July 2012, Available online 31 October 2012. We thank Luc Bauwens, Wolfgang Bessler, Riccardo Calcagno, B. Espen Eckbo, Piotr Korczak, Michel Levasseur, Neslihan Ozkan, Nikola Petrovic, Armin Schwienbacher, Ryad Titah, Karin Thorburn, Burcin Yurtoglu, and an anonymous referee, as well as participants of the Bristol University accounting and finance seminar, the CORE Econometrics seminar, the European Center for Corporate Control Studies finance seminar, the Financial Management Association European meeting 2012 (Istanbul), the Louvain School of Management finance seminar, and the WHU Otto Beisheim School of Management finance seminar, for their many comments and suggestions. The first two authors acknowledge financial support from University of Lille 2 (Finance, Banking, and Accounting Department) and SKEMA Business School.

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Learning from repetitive acquisitions: Evidence from the time between deals

Abstract

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