TY  - JOUR
AU  - Healy,Paul M.
AU  - Palepu,Krishna G.
AU  - Rubak,Richard C.
TI  - Does Corporate Performance Improve After Mergers?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3348
PY  - 1990
Y2  - May 1990
UR  - http://www.nber.org/papers/w3348
L1  - http://www.nber.org/papers/w3348.pdf
N1  - Author contact info:
Paul Healy
Harvard Business School
Soldiers Field Road
Boston, MA 02163
Tel: 617 566-1748
E-Mail: phealy@mit.edu

Krishna Palepu
Harvard Business School
Morgan Hall 385
Soldiers Field
Boston, MA 02163
http://krishnapalepu.org/
Tel: 617/495-6759
E-Mail: kpalepu@hbs.edu
M2  - featured in NBER digest on 1990-10-01
AB  - 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.
ER  -