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Accounting Rates of Return as Measures of Post-Merger Perfor Mance

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  • Patricia Stanton

    (Department of Commerce, University of Newcastle.)

Abstract

Accounting rates of return are used widely in empirical studies to assess postmerger perfor Mance and to compare this perfor Mance with that of non-merged firms. This paper suggests that there are many problems involved. In particular, accounting rates of return are unreliable measures of post-merger perfor Mance, and introduce bias into the results of post-merger perfor Mance studies.

Suggested Citation

  • Patricia Stanton, 1987. "Accounting Rates of Return as Measures of Post-Merger Perfor Mance," Australian Journal of Management, Australian School of Business, vol. 12(2), pages 293-304, December.
    • Handle: RePEc:sae:ausman:v:12:y:1987:i:2:p:293-304
    DOI: 10.1177/031289628701200209
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    References listed on IDEAS

    as
    1. Utton, M A, 1974. "On Measuring the Effects of Industrial Mergers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 21(1), pages 13-28, February.
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    3. Lev, Baruch & Mandelker, Gershon, 1972. "The Microeconomic Consequences of Corporate Mergers," The Journal of Business, University of Chicago Press, vol. 45(1), pages 85-104, January.
    4. Singh, Ajit, 1975. "Take-Overs, Economic Natural Selection, and the Theory of the Firm: Evidence from the Postwar United Kingdom Experience," Economic Journal, Royal Economic Society, vol. 85(339), pages 497-515, September.
    5. Ikeda, Katsuhiko & Doi, Noriyuki, 1983. "The Performances of Merging Firms in Japanese Manufacturing Industry: 1964-75," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 257-266, March.
    6. Meeks, G & Meeks, J G, 1981. "Profitability Measures as Indicators of Post-merger Efficiency," Journal of Industrial Economics, Wiley Blackwell, vol. 29(4), pages 335-344, June.
    7. Mahajan, Arvind, 1984. "Profitability Measures as Indicators of Post-Merger Efficiency Revisited," Journal of Industrial Economics, Wiley Blackwell, vol. 33(1), pages 135-138, September.
    8. Melicher, Ronald W & Rush, David F, 1974. "Evidence on the Acquisition-Related Performance of Conglomerate Firms," Journal of Finance, American Finance Association, vol. 29(1), pages 141-149, March.
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