Riding the merger wave: Uncertainty, reduced monitoring, and bad acquisitions

• 成果类型: Article
• 署名作者: Duchin, Ran; Schmidt, Breno
• 署名单位: University of Washington; University of Washington Seattle; Emory University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2012.07.003
• 发表日期: 2013
• 页码: 69-88
• 关键词: Mergers and acquisitions; governance; merger waves; turnover; uncertainty

摘要

We show that acquisitions initiated during periods of high merger activity (merger waves) are accompanied by poorer quality of analysts' forecasts, greater uncertainty, and weaker CEO turnover-performance sensitivity. These conditions imply reduced monitoring and lower penalties for initiating inefficient mergers. Therefore, merger waves may foster agency-driven behavior, which, along with managerial herding, could lead to worse mergers. Consistent with this hypothesis, we find that the average long-term performance of acquisitions initiated during merger waves is significantly worse. We also find that corporate governance of in-wave acquirers is weaker, suggesting that agency problems may be present in merger wave acquisitions. (C) 2012 Elsevier B.V. All rights reserved.