On the Role of Acquisition Premium in Acquisition Research

Item Type Journal paper
Abstract

Several studies argue that paying high acquisition premia is value destroying for acquirer shareholders. There are studies that have even used the size of premium as a measure of low-quality decision making. This paper departs from the earlier research and shows that acquisition premia may be justified when target firms' resources are difficult for the market to value. An analysis of a sample of 458 acquisitions demonstrates that although higher premia are paid for R&D-related assets, the premia do not cause negative abnormal returns. Abnormal returns are more strongly affected by the overall target price levels independent of premia. Copyright © 2007 John Wiley & Sons, Ltd.

Authors Laamanen, Tomi
Journal or Publication Title Strategic Management Journal
Language English
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date 1 December 2007
Publisher Wiley
Place of Publication Chichester [u.a.]
Volume 28
Number 13
Page Range 1359-1369
Number of Pages 11
ISSN 0143-2095
ISSN-Digital 1097-0266
Publisher DOI 10.1002/smj.639
Depositing User Prof. Dr. Tomi Laamanen
Date Deposited 25 Jan 2013 15:45
Last Modified 23 Aug 2016 11:15
URI: https://www.alexandria.unisg.ch/publications/219938

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Citation

Laamanen, Tomi (2007) On the Role of Acquisition Premium in Acquisition Research. Strategic Management Journal, 28 (13). 1359-1369. ISSN 0143-2095

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https://www.alexandria.unisg.ch/id/eprint/219938
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