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The impact of market cycle on the performance of Singapore acquirers

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  • Nitin Pangarkar
  • Junius R. Lie

Abstract

In this paper, we hypothesize that acquisitions undertaken during low market cycles will exhibit better performance than other acquisitions for two key reasons: lower likelihood of overpayment due to hubris and ease in implementing restructuring initiatives such as retrenchment. We define performance as the cumulative abnormal returns surrounding the acquisition event and deploy a trend‐based measure for market cycle. Based on an analysis of 115 acquisitions by Singapore firms between 1990 and 1999, we find strong support for the hypothesized relationship. Copyright © 2004 John Wiley & Sons, Ltd.

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  • Nitin Pangarkar & Junius R. Lie, 2004. "The impact of market cycle on the performance of Singapore acquirers," Strategic Management Journal, Wiley Blackwell, vol. 25(12), pages 1209-1216, December.
    • Handle: RePEc:bla:stratm:v:25:y:2004:i:12:p:1209-1216
    DOI: 10.1002/smj.434
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    Cited by:

    1. Abhirup Chakrabarti, 2015. "Organizational adaptation in an economic shock: The role of growth reconfiguration," Strategic Management Journal, Wiley Blackwell, vol. 36(11), pages 1717-1738, November.
    2. López Zapata, Esteban & García Muiña, Fernando Enrique & García, Susana María, 2019. "Analysing the relationship between diversification strategy and firm performance: the role of the economic cycle," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    3. Rao-Nicholson, Rekha & Ayton, Julie (Salaber), 2016. "Euphoria in financial markets: How Indian companies generate value in their cross-border acquisitions," Research in International Business and Finance, Elsevier, vol. 38(C), pages 494-508.
    4. Do, Hung X. & Nguyen, Nhut H. & Nguyen, Quan M.P., 2022. "Multinationals and stock return comovement," Global Finance Journal, Elsevier, vol. 52(C).
    5. Anna Nadolska & Harry G. Barkema, 2014. "Good learners: How top management teams affect the success and frequency of acquisitions," Strategic Management Journal, Wiley Blackwell, vol. 35(10), pages 1483-1507, October.
    6. Parama Barai & Pitabas Mohanty, 2014. "Role of industry relatedness in performance of Indian acquirers—Long and short run effects," Asia Pacific Journal of Management, Springer, vol. 31(4), pages 1045-1073, December.
    7. Piaskowska, D., 2005. "Essays on firm growth and value creation," Other publications TiSEM 89053610-79c6-4c52-9d1c-6, Tilburg University, School of Economics and Management.

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