IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v18y2002i3p263-281.html
   My bibliography  Save this article

Growth by acquisition and the performance of large food retailers

Author

Listed:
  • Bruce Bjornson

    (University of Missouri, 125-B Mumford Hall, Columbia, MO 65211-6200. E-mail: BjornsonB@missouri.edu)

  • Michael E. Sykuta

    (University of Missouri, 143-B Mumford Hall, Columbia, MO 65211-6200. E-mail: SykutaM@missouri.edu)

Abstract

The latter 1990s witnessed rapid growth among the largest retail food chain companies, much of it through acquisitions. An explanatory motive is that grocery chains could achieve greater scale economies and operating efficiencies, and increase their bargaining power with packaged food manufacturer-suppliers. This article begins to examine whether the largest retailers are realizing the promised financial rewards associated with this growth trend. We examine the performance of the three largest U.S. food retailers, Albertson's, Inc., The Kroger Company, and Safeway Inc., over 7 fiscal years beginning in calendar year 1993 and ending in fiscal year 1999, a period that covers the recent increase in acquisition activity. Overall, we find only modest evidence that the financial returns to the rapid growth strategies of the three largest food retailers have begun to be realized through fiscal year 1999. [EconLit citations: G390, G340, Q130] © 2002 Wiley Periodicals, Inc.

Suggested Citation

  • Bruce Bjornson & Michael E. Sykuta, 2002. "Growth by acquisition and the performance of large food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 263-281.
    • Handle: RePEc:wly:agribz:v:18:y:2002:i:3:p:263-281
    DOI: 10.1002/agr.10024
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/agr.10024
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.10024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bradley, Michael & Desai, Anand & Kim, E. Han, 1988. "Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms," Journal of Financial Economics, Elsevier, vol. 21(1), pages 3-40, May.
    2. Lev, B & Thiagarajan, Sr, 1993. "Fundamental Information Analysis," Journal of Accounting Research, Wiley Blackwell, vol. 31(2), pages 190-215.
    3. Fisher, Franklin M & McGowan, John J, 1983. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," American Economic Review, American Economic Association, vol. 73(1), pages 82-97, March.
    4. Abarbanell, JS & Bushee, BJ, 1997. "Fundamental analysis, future earnings, and stock prices," Journal of Accounting Research, Wiley Blackwell, vol. 35(1), pages 1-24.
    5. Neibergs, J. Shannon, 1998. "Macroeconomic Conditions And Agribusiness Profitability: An Analysis Using Pooled Data," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 1(1), pages 1-15.
    6. Waring, Geoffrey F, 1996. "Industry Differences in the Persistence of Firm-Specific Returns," American Economic Review, American Economic Association, vol. 86(5), pages 1253-1265, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Connor, John M., 2003. "The Changing Structure Of Global Food Markets: Dimensions, Effects, And Policy Implications," Staff Papers 28675, Purdue University, Department of Agricultural Economics.
    2. Zhang, Yuehua & Rao, Xudong & Wang, H. Holly, 2019. "Organization, technology and management innovations through acquisition in China’s pork value chains: The case of the Smithfield acquisition by Shuanghui," Food Policy, Elsevier, vol. 83(C), pages 337-345.
    3. Martinez, Stephen W., 2007. "The U.S. Food Marketing System: Recent Developments, 1997-2006," Economic Research Report 55962, United States Department of Agriculture, Economic Research Service.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Safdar, Irfan, 2016. "Industry competition and fundamental analysis," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 36-54.
    2. Bradley Blaylock & Bradley P. Lawson & Michael A. Mayberry, 2020. "Taxable income, future profitability, and stock returns," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(7-8), pages 858-881, July.
    3. Hirshleifer, David & Kewei Hou & Teoh, Siew Hong & Yinglei Zhang, 2004. "Do investors overvalue firms with bloated balance sheets?," Journal of Accounting and Economics, Elsevier, vol. 38(1), pages 297-331, December.
    4. Dafydd Mali & Hyoung‐joo Lim, 2021. "Do Relatively More Efficient Firms Demand Additional Audit Effort (Hours)?," Australian Accounting Review, CPA Australia, vol. 31(2), pages 108-127, June.
    5. Bartram, Söhnke M. & Grinblatt, Mark, 2018. "Agnostic fundamental analysis works," Journal of Financial Economics, Elsevier, vol. 128(1), pages 125-147.
    6. Lu Zhang, 2017. "The Investment CAPM," European Financial Management, European Financial Management Association, vol. 23(4), pages 545-603, September.
    7. Photis Panayides & Neophytos Lambertides, 2011. "Fundamental Analysis and Relative Efficiency of Maritime Firms: Dry Bulk vs Tanker Firms," Chapters, in: Kevin Cullinane (ed.), International Handbook of Maritime Economics, chapter 5, Edward Elgar Publishing.
    8. Daniel, Kent & Hirshleifer, David & Teoh, Siew Hong, 2002. "Investor psychology in capital markets: evidence and policy implications," Journal of Monetary Economics, Elsevier, vol. 49(1), pages 139-209, January.
    9. Francesco Campanella & Mario Mustilli & Eugenio D¡¯Angelo, 2016. "Efficient Market Hypothesis and Fundamental Analysis: An Empirical Test in the European Securities Market," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 27-42, February.
    10. Kewei Hou & Haitao Mo & Chen Xue & Lu Zhang, 2017. "The Economics of Value Investing," NBER Working Papers 23563, National Bureau of Economic Research, Inc.
    11. Yvonne J. Acheampong & James E. Epperson & Timothy A. Park & Lewell F. Gunter, 2004. "Profitability adjustment patterns in international food and consumer products industries," Agribusiness, John Wiley & Sons, Ltd., vol. 20(1), pages 31-43.
    12. Kothari, S. P., 2001. "Capital markets research in accounting," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 105-231, September.
    13. Jerker Denrell, 2004. "Comment: The Performance of Performance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 8(4), pages 345-349, October.
    14. Nicholas Apergis & John Sorros, 2010. "Disaggregated Earnings and Stock Prices: Evidence from International Listed Shipping Firms," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(3), pages 269-281, August.
    15. Jacob Thomas & Frank Zhang, 2007. "Tax Expense Surprises and Future Returns," Yale School of Management Working Papers amz2531, Yale School of Management, revised 01 Feb 2008.
    16. Norio Kitagawa & Akinobu Shuto, 2015. "Credibility of management earnings forecasts and future returns," CARF F-Series CARF-F-367, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    17. Ruey S. Tsay & Yi-Mien Lin & Hsiao-Wen Wang, 2009. "Residual income, non-earnings information, and information content," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(6), pages 487-511.
    18. Nikola Petrovic & Stuart Manson & Jerry Coakley, 2009. "Does Volatility Improve UK Earnings Forecasts?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(9‐10), pages 1148-1179, November.
    19. Gregory D. Kane & Ryan D. Leece & Frederick M. Richardson & Uma Velury, 2015. "The Impact of Recession on the Value-relevance of Accounting Information," Australian Accounting Review, CPA Australia, vol. 25(2), pages 185-191, June.
    20. Bok Baik & Kyonghee Kim & Richard Morton & Yongoh Roh, 2016. "Analysts’ pre-tax income forecasts and the tax expense anomaly," Review of Accounting Studies, Springer, vol. 21(2), pages 559-595, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:18:y:2002:i:3:p:263-281. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.