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How far does financial reporting allow us to judge whether M&A activity is successful?

Dargenidou, Christina, Gregory, Alan and Hua, Shan (2016) How far does financial reporting allow us to judge whether M&A activity is successful? Accounting and Business Research, 46 (5). pp. 467-499.

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Abstract

Evidence from share price returns suggests that acquisitions destroy value. On the other hand, evidence from accounting measures of performance suggests that acquisitions give rise to synergies and therefore potentially create value. In this paper, we first revisit the UK evidence using an updated sample, and confirm that these findings still hold, and importantly hold in the period following the introduction of FRS10. We then reconcile the (apparently conflicting) findings from these market-based and accounting-based approaches. Using accounting measures of performance, we confirm the presence of synergies developed during acquisitions. Finally we show that post-acquisition abnormal returns are associated with news of synergistic benefits conveyed in the financial statements.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
NameEmailORCID
Dargenidou, Christina
Gregory, Alan
Hua, Shans.hua@surrey.ac.uk
Date : 13 May 2016
DOI : 10.1080/00014788.2016.1182702
Copyright Disclaimer : © 2016 Taylor & Francis. This is an Accepted Manuscript of an article published by Taylor & Francis in Accounting and Business Research on 13/05/2016, available online: https://www.tandfonline.com/doi/abs/10.1080/00014788.2016.1182702 .
Uncontrolled Keywords : Mergers; Acquisition; Performance
Depositing User : Clive Harris
Date Deposited : 06 Dec 2018 11:03
Last Modified : 06 Dec 2018 11:05
URI: http://epubs.surrey.ac.uk/id/eprint/849990

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