Does acquirer cash level predict post-acquisition returns?

• 成果类型: Article
• 署名作者: Oler, Derek K.
• 署名单位: Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-007-9052-1
• 发表日期: 2008
• 页码: 479-511
• 关键词: OPERATING PERFORMANCE; earnings management; EMPIRICAL POWER; BIDDING FIRMS; STOCK; gains; specification; determinants; INFORMATION; INVESTMENT

摘要

This paper investigates whether an acquirer's pre-announcement cash level can predict post-acquisition returns. Harford (1999, Journal of Finance, 54, 1969-1997) shows that some cash-rich acquirers have lower announcement period returns than other acquirers, suggesting the market partially anticipates poor future performance. This paper shows that the acquirer's cash level is also strongly and negatively predictive of post-acquisition returns, indicating that the announcement response is incomplete. Post-acquisition return on net operating assets (RNOA) is significantly decreasing in acquirer cash, suggesting that the market responds to subsequent poor operating performance as it is reported. Overall, these results are consistent with the market's inattention to a less prominent accounting signal (acquirer cash) but attentiveness to a more prominent accounting signal (RNOA), as proposed by Hirshleifer and Teoh (2003, Journal of Accounting Economics, 36, 337-386).