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Bidder Gains and Losses of Firms Involved in Many Acquisitions

Antoniou, Antonios; Petmezas, Dimitris; Zhao, Huainan


Antonios Antoniou

Dimitris Petmezas

Huainan Zhao


D Petmezas


We examine shareholders' wealth effects (both in the short- and the long-run) of UK frequent bidders acquiring public, private, and/or subsidiary targets with alternative methods of payment between 1987 and 2004. We find that, in the short-run, bidders break even when acquiring public targets and gain significantly when buying private and subsidiary targets. This result is robust after controlling for relative size, bidder's book-to-market ratio, target origin, and industry diversification. Our long-run evidence, however, reveals that acquirers experience, significant wealth losses regardless of the target type acquired, indicating that markets may initially overreact to the acquisition announcement. As a result, we argue that contrary to Fuller et al. (2002) who suggest that acquiring private and subsidiary firms creates value for bidding firms, a reliable conclusion on bidders' shareholders wealth effects cannot be based solely on a short-run event study.


Antoniou, A., Petmezas, D., & Zhao, H. (2007). Bidder Gains and Losses of Firms Involved in Many Acquisitions. Journal of Business Finance and Accounting, 34(7-8), 1221-1244.

Journal Article Type Article
Publication Date 2007-10
Deposit Date Aug 19, 2008
Journal Journal of business finance & accounting
Print ISSN 0306-686X
Electronic ISSN 1468-5957
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 34
Issue 7-8
Pages 1221-1244
Public URL