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The Impact of Acquisitions on Operating Performance: Some Australian Evidence

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  • Divesh S. Sharma
  • Jonathan Ho

Abstract

This study investigates the impact of acquisitions on the operating performance of Australian firms. For a sample of 36 Australian acquisitions occurring between 1986 to 1991 inclusive, and using matched firms to control for industry and economy‐wide factors, the results based on four accrual and four cash flow performance measures show that corporate acquisitions do not lead to significant improvements in post‐acquisition operating performance. The consistency of the results with the agency, the hubris and the financial motivation hypotheses suggests that corporate acquisitions in Australia may be undertaken for other than synergistic reasons. The results assist in explaining inconsistent findings reported in the literature.

Suggested Citation

  • Divesh S. Sharma & Jonathan Ho, 2002. "The Impact of Acquisitions on Operating Performance: Some Australian Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(1‐2), pages 155-200.
    • Handle: RePEc:bla:jbfnac:v:29:y:2002:i:1-2:p:155-200
    DOI: 10.1111/1468-5957.00428
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