NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Corporate Performance Improve After Mergers?

Paul M. Healy, Krishna G. Palepu, Richard C. Rubak

NBER Working Paper No. 3348
Issued in May 1990
NBER Program(s):   ME   PE

We examine the post-acquisition operating performance of merged firms using a sample of the 50 largest mergers between U.S. public industrial firms completed in the period 1979 to 1983. The results indicate that merged firms have significant improvement in asset productivity relative to their industries after the merger, leading to higher post-merger operating cash flow returns. Sample firms maintain their capital expenditure and R&D rates relative to their industries after the merger, indicating that merged firms do not reduce their long-term investments. There is a strong positive relation between postmerger increases in operating cash flows and abnormal stock returns at merger announcements, indicating that expectations of economic improvements underlie the equity revaluations of the merging firms.

download in pdf format
   (527 K)

email paper

This paper is available as PDF (527 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3348

Published: JFEC, Vol. 31, no. 2 (1992): 135-176.

Users who downloaded this paper also downloaded these:
Maksimovic, Phillips, and Prabhala w14291 Post-Merger Restructuring and the Boundaries of the Firm
Holmstrom and Kaplan w8220 Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s
Myers and Majluf w1396 Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have
Shleifer and Vishny w8439 Stock Market Driven Acquisitions
Schwert w4863 Mark-Up Pricing in Mergers and Acquisitions
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us