Archive for the ‘Financial Week’ Category
Biz Bites (Financial Week: Mar 10, 2008)
As the end of yet another merger boom nears, new research indicates some companies could do better by holding off on that purchase sitting in the pipeline. A study by Michigan State University professor Gerry McNamara and his co-authors looked at more than 3,000 public companies involved in industry acquisition waves between 1984 and 2004, and found that acquisition returns bottom out about two-thirds of the way through a cycle. Early birds saw stock gains averaging 4.2% post-deal, while companies that hopped on the bandwagon later experienced an average 3% drop in share price. What gives? Early movers tend to make better-researched choices and buy at more advantageous prices, while latecomers are more likely to lose value because they often act on market hype rather than on rational financial decisions.
