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Research Method and the Long†Run Perfor Mance of Acquiring Firms

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  • Philip Brown

    (Department of Accounting and Finance, University of Western Australia, Nedlands WA 6907, E†mail: rdasilva@ecel.uwa.edu.au)

  • Raymond da Silva Rosa

Abstract

The long†run perfor Mance of successful bidders in a takeover has been controversial. We assess their long†run perfor Mance by controlling for survival, firm size, and measurement bias in return cumulation. Measures of the perfor Mance of acquiring firms relative to control firms are sensitive to survival constraints implicit in the sampling process and to share return characteristics empirically associated with trading frequency In the pre†bid and bid periods, the strong share market perfor Mance of acquiring firms masks the bias; it is more salient after the bid. Controlling for survival mitigates the new†listing and delisting biases in the pre†and post†bid periods.

Suggested Citation

  • Philip Brown & Raymond da Silva Rosa, 1998. "Research Method and the Long†Run Perfor Mance of Acquiring Firms," Australian Journal of Management, Australian School of Business, vol. 23(1), pages 23-38, June.
    • Handle: RePEc:sae:ausman:v:23:y:1998:i:1:p:23-38
    DOI: 10.1177/031289629802300102
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    References listed on IDEAS

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    2. Chris Ratcliffe & Bill Dimovski & Monica Keneley & Tom Smith, 2017. "Long-Term post-merger announcement performance. A case study of Australian listed real estate," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(3), pages 855-877, September.

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