Harvard Business School
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Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|January 1993||International Corporate Equity Associations: Who, Where, and Why?|
with Krishna G. Palepu
in Foreign Direct Investment, Kenneth A. Froot, editor
|May 1990||Does Corporate Performance Improve After Mergers?|
with Krishna G. Palepu, Richard C. Rubak: w3348
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 me...
Published: Paul M. Healy & Krishna G. Palepu & Richard S. Ruback, 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, vol 31(2), pages 135-175.