THE POSTMERGER SHARE-PRICE PERFORMANCE OF ACQUIRING FIRMS

This paper investigates share-price performance following corporate takeovers. We use multifactor benchmarks from the portfolio evaluation literature that overcome some of the known mean-variance inefficiencies of more traditional single-factor benchmarks. Studying 399 U.S. takeovers consummated in the 1975-1984 period, we conclude that previous findings of poor performance afer takeover are likely due to benchmark errors rather than mispricing at the time of the takeover. © 1991.