The long-run performance of acquiring firms in mergers and acquisitions : Does managerial ability matter?

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Author(s)

Detail(s)

Original languageEnglish
Article number100185
Journal / PublicationJournal of Contemporary Accounting and Economics
Volume16
Issue number1
Online published25 Jan 2020
Publication statusPublished - Apr 2020

Abstract

This paper examines the association between the managerial ability of acquiring firms and their long-term performance after mergers and acquisitions (M&As). Based on M&A data for U.S. firms from 2000 to 2012, we find that acquiring firms with higher managerial ability achieve better long-term operating performance and stock returns. We also find that the positive effect of managerial ability on long-term performance is more pronounced when acquirers and target firms belong to the same industry. The result suggests that managers who have higher ability to manage their firms, i.e., to generate higher revenues for given resources, are more capable of achieving higher synergy benefits and better post-acquisition performance in same-industry acquisitions than in cross-industry acquisitions.

Research Area(s)

  • Data envelopment analysis, Horizontal acquisition, Managerial ability, Mergers and acquisitions