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Explaining M&A performance: a review of empirical research

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DOI: 10.1108/17554251211247580

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Journal of Strategy and Management
Emerald Article: Explaining M&A performance: a review of empirical
research
Arindam Das, Sheeba Kapil

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To cite this document: Arindam Das, Sheeba Kapil, (2012),"Explaining M&A performance: a review of empirical research",
Journal of Strategy and Management, Vol. 5 Iss: 3 pp. 284 - 330
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JSMA
5,3
Explaining M&A performance:
a review of empirical research
Arindam Das
Research Division, Indian Institute of Foreign Trade, New Delhi, India, and
284
Sheeba Kapil
Indian Institute of Foreign Trade, New Delhi, India

Abstract
Purpose – The purpose of this paper is to provide an understanding of different explanations in
mergers and acquisitions (M&A) research that deal with M&A performance. After five decades of
M&A research, the findings on M&A performance are diverse and sometimes inconsistent with each
other. The explanatory variables studied in the empirical works reflect primarily on researchers’
approach, construct, measurement techniques and data availability, leading to inconsistencies among
the findings. In order to understand how researchers have measured M&A performance so far, the
gaps in existing work and to identify the scope of future work, the authors conduct a systematic
review of empirical M&A research on explaining M&A performance.
Design/methodology/approach – This research has been carried out as a structured assessment of
past literature. The findings from selected research works have been categorized, grouped and
summarized to discern a meta-analytic view of the work carried out to date.
Findings – The M&A performance measures are diverse owing to heterogeneous views on what
constitutes M&A performance and organization performance. They are categorized under Accounting
Measures, Market Measures and Other Measures, including subjective assessments. The explanatory
variables found in the studies are extensive and can be categorized under Deal Characteristics,
Managerial Effects, Firm Characteristics and Environmental Factors.
Originality/value – The paper extracts some key trends in M&A performance studies carried out in
empirical works over two decades. The findings help to identify drawbacks and set an agenda for
future work.
Keywords Acquisitions and mergers, Research work, M&A performance
Paper type Literature review

Journal of Strategy and Management
Vol. 5 No. 3, 2012
pp. 284-330
r Emerald Group Publishing Limited
1755-425X
DOI 10.1108/17554251211247580
1. Introduction
Performance of mergers and acquisitions (M&As) is a topic that has been dealt with
extensively in M&A research since the 1960s. While M&A continues to be a favorite
growth strategy for the businesses across the world, the academic community is
divided on whether M&As provide real benefits to acquiring firms. Several empirical
studies completed mostly in the field of finance conclude that M&As do not always
create value or assure growth for the acquirer and the failure rate ranges from 44 to 50
percent (Cartwright and Schoenberg, 2006). However, the literature of industrial
organizations and strategic management suggest otherwise (Lubatkin, 1983). Some
academicians explain such inconsistency by the fact that each M&A is unique and
therefore findings are not comparable (Lubatkin, 1987) while others find that M&As do
not create value for all the stakeholders (Datta et al., 1992). Some researchers suggest
that there are unidentified variables that would better explain variance in acquisition
performance (King et al., 2004). Some of the recent researches posit that the construct
measurement in the empirical studies is not comprehensive for complex phenomena
like M&As (Zollo and Meier, 2008).
 In order to address the inconsistency and create a better understanding of how Explaining
researchers used different variables to explain M&A performance so far, we conduct a M&A
systematic literature review of empirical M&A research in narrative form. In this
paper, we present a review of 48 papers on M&A performance. We find that 46 unique performance
measures were studied for M&A performance in these papers. More importantly, as
many as 125 unique variables have been used as explanatory variables or independent
variables in these studies. The reason for such varied ways to measure performance is 285
that performance, like many other organizational constructs, lacks universal definition
and construct and is contingent upon the questions the researchers intend to answer.
With such a large number of multi-disciplinary measures and explanations of M&A
performance, comparison leads to inconsistency. Through this review, we elicit the
variety of meanings attached to the term “M&A performance” and identify research
areas that can help explain M&A performance better.
To begin with, we realize that instead of single universal definition of M&A
performance, the multitude of performance measures need appropriate categorization
for meaningful analysis as all the measures are not unidirectional though there are
linkages among many and the objectives of M&A performance study tend to be
discipline specific. In order to maintain consistency with general management research
on organizational performance we classify these performance variables as financial
performance variables (i.e. variables related to profits, return on assets, return on
investments, etc.), market performance variables (sales, market share, stock market
performance) and other non-financial operational performance elements, including
subjective measures. We go on to identify the explanatory variables in the empirical
work and their ability to explain M&A performance. As the number of explanatory
variables is much higher, we categorize them by level of analysis and functional areas
and restrict our discussion to the most frequently used variables.
The remainder of this paper is structured as follows. We begin with definition of
organizational performance and its measurement. In the following section, we explain
our methodology. In the subsequent sections, we discuss the findings on dependent
variables in empirical studies on M&A performance. Thereafter, we discuss the current
gaps and provide pointers to future M&A performance studies.

2. Measuring M&A performance

Organizational performance
Organizations are typically defined as instruments of purposes, coordinated by vision,
strategies and goals. However, with multiple purposes the measure of performance
becomes complex with plethora of indicators, e.g., profit, sales, market share,
productivity, debt ratios, stock prices, innovation, employee satisfaction and many
other indicators. Nonetheless, organizational performance continues to be a focus in
management, organization and strategy research since it is seen as a benchmark to
gauge the effectiveness of managerial decisions and the purpose of the organization. To
get a better understanding of M&A performance we need to understand how
organizational performance is measured.
Even after five decades since Chandler’s observation (Chandler in Busija et al., 1997)
that firms seek growth, the relationships among growth patterns, growth modes and
performance remain enigmatic. In an early study, Venkatraman and Ramanujam (1986)
have modeled domain of business performance as a set of three concentric circles:
the inner one representing the financial performance, the middle one representing the
combination of financial and operational performance and outer one representing
JSMA the all-encompassing performance, represented by term organizational effectiveness.
5,3 On similar lines, Richard et al. (2009) have defined the scope of organizational
performance to three firm outcomes: financial performance, market performance
and shareholder returns. In comparison, organizational effectiveness, another related
indicator, captures organizational performance plus a range of other measures that are
associated with considerations beyond economic valuation. They have also suggested
286 that while multi-dimensionality of performance is recognized in management research
for a long time, the empirical studies lacked consistency in measurement. Most
empirical studies define organizational performance as the dependent variable to
identify what variables may explain or predict its variance (March and Sutton, 1997).
In a meta-analysis of studies on financial performance of firms, Capon et al. (1990)
have investigated how environmental, strategic and organizational factors relate to
financial performance. They have found that some widely studies factors (e.g. industry
concentration and growth) have relatively consistent positive impact on performance
whereas factors like size have inconsistent effects. In addition, many organizational
variables are not studied widely.
The different dimensions of performance stem from multiple reasons: first, an
organization is viewed differently by different stakeholders and stakeholders’
expectations from the organization differ; second, the resources and strategic choices
available to each firm are different and these shape the firms’ own performance goals;
and third, performance and activities of the organization has time series implications
(Richard et al., 2009).

M&A performance
Though M&A performance has been a research topic among the academics and
practitioners there are vast differences in approaches to defining and measuring
M&A performance. Broadly speaking, the empirical research on the performance of
M&As has been conducted in two major approaches: event studies and outcome
studies. The first one is commonly found in the finance literature, whereas the second
one is more frequently used by industrial organization economists. Industrial
organization economists use outcome studies to examine the performance effect of
M&As. Using the stock market response as a measure for M&A performance, outcome
studies compare the pre- and post-acquisition performance, and compare the merging
firms with matching firms or the base industry (Tichy, 2001). However, there are
limitations with the outcome studies approach. First, for the before-and-after
analyses, problems may occur when the target firm is quite small relative to the
acquirer as the weighted average financial performance the target firm contributes
to the M&A is likely to have no effect due to size differential. Second, there is difficulty
in identifying similar firms as control groups when almost all firms are engaged
in M&A.
Event studies are used to analyze stock market reactions to the events that occur at
the time of an M&A or in its aftermath. This approach assumes that the market is
efficient and therefore changes in the share prices of the acquiring and target firms
reflect the value of the economic impact of an acquisition, after controlling for the
general market movements. The results from various event studies suggest that
the impact of an acquisition on a target firm is positive. Within a several-week time
“window” around the event date (i.e. the announcement of the M&A), the target’s stock
price rises sharply so that the stockholders of the target firm earn substantial positive
abnormal returns.
 The performance measures in empirical studies include both subjective assessment Explaining
and objective assessment. Subjective measurements have focussed on degrees of M&A
synergy realization, integration effectiveness and of strategic gap reduction. Objective
measurements use accounting performance, market performance and other operational performance
data. The time horizon used vary from short term (e.g. around the announcement
date) to long term (up to five years after completing the acquisition). The level of
analysis involved improvement of firm performance or competitive position to process 287
efficiency (e.g. quality of execution of the post-acquisition plans, magnitude of
premium paid, etc.). Zollo and Meier (2008) have categorized past empirical studies
on M&A performance measures into disparate categories, namely, integration process
performance, employee retention, customer retention, accounting performance, long-
term financial performance, short-term financial performance, acquisition survival,
innovation performance, knowledge transfer, systems conversion, variation in market
share and overall acquisition performance. However, they were able to reduce these
constructs to three distinguishable dimensions: one related to the task and transaction
levels of analysis, a second one related to the long-term firm performance (including,
customer retention) and a third one singling out the short-term window event
study metrics.

3. Methodology
In this descriptive analysis, we search peer-reviewed journals in the areas strategy,
finance and accounting and applied economics and identify 730 papers published
on different areas of M&A during 1990-2010 that have the following words in their
text: performance, value driver, determinant and factor. From these papers we shortlist
only those that have carried out empirical studies or developed conceptual model on
M&A performance. The final count of papers considered for analysis of variables is 46.
We review each of the shortlisted papers in detail: analyze the dependent variables,
independent variables, control variables, scope of work, proposed hypotheses and
characteristics of the samples studied. We also summarize the objectives and findings
of each of these studies.
The reviewed papers cover a wider range of time segments, approximately 30 years
and include both domestic M&As and cross-border M&As. Although the majority of
the studies are from North America, a few are from emerging markets like India, Brazil
and China. While most of the studies were been conducted across industries, some had
focussed on specific industries. The following sections deliberate on the findings of
dependent variables and explanatory variables.

4. M&A performance as dependent variable

The selected studies covered a wide range of variables to measure M&A performance,
addressing a multitude of objectives and organizational constructs from different
disciplines: strategy, finance, marketing, human resource (HR), etc. Some of the earlier
meta-analytic studies have categorized performance measures based on level of
analysis (task, transaction, firm), period of observation (short term, long term) and
whether they were subjective or objective (Zollo and Meier, 2008). Others (Richard et al.,
2009) have classified performance variables in a matrix structure: domain (financial
and non-financial) on one axis and objectivity (objective and perceptual) on another
axis. Extending on these categorizations, we categorize our observed variables into
four areas: accounting measures, financial market measures, mixed (market/
accounting) and other objective measures and subjective measures. We also classify
JSMA the observed variables as positive, neutral or negative measures depending on their
5,3 connotation on firm performance.

Accounting measures
The accounting measures found in empirical M&A studies primarily include growth
and return variables. The M&A researchers’ choice of these variables is not surprising
288 as almost all of them are reviewed regularly as financial performance of firms. This is
contrary to the argument made by Bild et al. (2002) that accounting data pre- and
post-acquisition cannot measure the real value creation for the acquirer, as these
indicators are not clearly related to whether the acquisition is a net NPV positive
investment for the acquirer. Whether the additional profit returns, if any, brought
about by the acquisition are greater than the cost of capital cannot be evaluated
through these measures. Another important limitation of accounting measures is that
they emphasize historic activity based on published, auditable data and can be quite
limited in predicting future performance. Especially, in a turbulent environment
the accounting measures are less comparable and may not be valid signals of economic
performance (Richard et al., 2009). We believe the M&A researchers continue to look
at accounting measures because of their easy availability and simple interpretation.
The accounting measures that are frequently studied include profitability measures
and top line growth.

Market-related measures
In M&A literature, we find market-based measures that are typically used with event
study methodology. A majority of the studies analyzed the short-term performance of
the acquirer in the market around the announcement date, implying that the market
knew the impact of acquisitions on acquiring firm’s value and reacted immediately
after deal announcement. This works fine when the acquirer’s objective is to capture
value by acquisition. However, short-term market-based measures are not suitable
when a deal is more focussed on long-term strategic objectives. The overlapping effects
of various factors on market performance of a firm will make it impossible to isolate
the long-term influence of M&A. Nevertheless, studies on long-term financial
performance are aimed at evaluating the extent to which the short-term losses or gains
reported by financial markets when the M&A is announced are later maintained.
In theory, the market value of these firms should not fluctuate abnormally, considering
their respective risk or compared to similar firms that have not carried out an M&A
(Francoeur, 2006). In essence, the biggest strengths of these measures are that they
are forward looking, representing the discounted present value of future cash flows
and they factor in the intangible assets more effectively than accounting measures.
However, the correlation between market measures to the actual performance
of the firm depends on shareholders’ equity in the firm and the information efficiency
of the market (Richard et al., 2009). In addition, the long-term market performance
measures represent the performance of the firm as a whole and response to multiple
events and not just the acquisition event.

Other objective measures

The other objective measures include mixed variables involving accounting and
market returns and several other operational metrics of the acquirer/target. The
advantage of mixed measures is that they are better able to balance factors ignored
by accounting measures and market measures. Tobin’s q appears to be the most
studied performance variable among these though there are questions raised by many Explaining
researchers on distortion in enumeration of Tobin’s q as the replacement value of M&A
the firm’s assets is usually measured through its closely related proxy, the book value
of assets. performance
Subjective measures
Apart from the above objective measures, a few subjective measures were found in 289
conceptual modeling as well as survey-based studies. Though subjective measures
weaken the generalizability of findings due to possible bias, they are justified when
the objective data for a specific construct is difficult to obtain. Additionally, prior
researches have shown that subjective measures do correlate to objective measures
(Zollo and Meier, 2008).
A summary listing of the four types of performance measures are listed in Table I.
Measures that have positive connotations on firm performance are marked with (m),
while the measures with negative connotations are marked with (k) and the neutral
measures are marked as (-).

5. Explanatory variables in M&A performance studies

This section analyzes the explanatory variables used in different studies and their
ability to influence the M&A performance measures. We tabulate the variables by type:
whether they are firm-level variables, industry-level variables or macro-level variables.
We also list the key information about the study: the time period of the data, acquirer
geographic region and industry and sample size of the study. We document whether
the explanatory variable are found to be significant in the study.
A few of the studies reviewed are conceptual in nature and the authors do not
establish any causal relationship through empirical evidences. Some studies have
focussed on establishing inter-relationship of the variables observed. The rest of the
studies have attempted to establish a cause-and-effect relationship through data
analysis.
Table II provides the details of the explanatory variables that are frequently
found across multiple studies. Apart from explaining the variable, we also record
the dependent variables that have been studied and if any statistical significance
has been found in the tests. This is mentioned through a ( þ ) or (-) specified after
the dependent variable. If we find no statistical significance, we use the notation ().
In case of curvilinear relationship that has been established in the test we use the
notation ( þ , ).
Haleblian et al. (2009) have suggested a framework combining the antecedents (the
factors that lead firms to undertake acquisitions) and the moderators (internal and
external factors that moderate acquisition performance) to classify the variables.
However, in our findings we do find variables that fall outside such classification. We
have categorized the variables by functional areas associated to these variables, e.g.,
finance/accounting, strategy, product development, operations, sales and marketing
and HR. Such categorization helps us understand the M&A researchers’ motives on
these functional areas in developing hypotheses on explaining M&A performance. We
also notice a large number of variables that interact with multiple functional areas in
the firm and such variables as well as industry and macro-variables are classified as
mixed/other (Table III).
Several studies have also analyzed the interaction effect of the explanatory
variables. For the sake of brevity’s we have not documented those.
JSMA Explanation/note
5,3
Accounting measures of M&A performance
Asset growth (m) Change in total assets over the period was found to be
varying at a different rate based on strategic choices
acquirer adopts
Asset turnover (m) Total revenue/total assets, i.e. sales dollars generated from
290 each dollar of investment in assets
Industry weighted return on sales Industry weighted ROS (ROS weighted by total sales in
(ROS) (m) each of the SIC code in which the firm operated) was
studied by Markides (1995) in addition to ROS
Profit after tax (PAT)/sales (m) PAT/sales is the moderated variable used as performance
measure by Kumar and Rajib (2007)
Pre-tax operating margin (m) Pre-tax profit/net sales
Profit (m) Profit level (total revenue-total expenses) is an inadequate
measure of performance because of the expected direct
relationship with corporate size. One of the studies
found that 79% of the variance of profit performance
associated with company size. However, median profit
level over a longer period after acquisition showed
significant improvement in comparison to that of
control firms which did not go for acquisition
PAT (m) Net profit earned by the firm after deducting all
expenses like interest, depreciation and tax
Return on assets (ROA) – Profitability is probably the most talked about measure of
profitability (m) business performance. One of the studies found a strong
relationship between capital structure and profitability
while other established causal relationship with strategic
choices adopted by the firms. ROA (net income/total
assets), an indicator of profitability was studied extensively
to measure M&A performance
Return on common equity (m) This is a variation of ROE and factors in preferred stock and
is defined as (net income – preferred dividend)/book value of
common equity
Return on equity (ROE) (m) ROE (net income/book value of shareholders’ equity) was
another profitability measure in M&A performance studies.
Kumar and Rajib (2007) used the term return on net worth
(RONW) in their study
Return on investments (ROI) (m) Defined as (net operating profit/net book value of assets),
ROI was studied for both pre-acquisition and
post-acquisition periods to assess M&A performance
ROS (m) Defined as net income (before interest and tax)/sales,
ROS was studied as a measure of M&A and
diversification
Sales (m) Sales volume (revenue from goods sold) was used to deflate
the cash flow in the model used by Kumar and Rajib (2007)
Sales growth (m) Change in sales over the period
Total assets (m) This is defined as sum of all cash, investments, equipment,
receivables, intangibles and any other items of value owned
by the acquirer. It showed an increasing trend in the period
of analysis of seven years (3 to þ 3 years with zero being
Table I. the year of merger)
Measures of M&A
performance (continued)

Market measures of M&A performance
Acquirer’s long-term market
return (m)
Acquirer’s short-term market
performance/cumulative abnormal
return (CAR) (m)
Alpha from Fama-French three
factor model (m)
Total long-term return to
shareholders (m)
Total short-term gain to acquirer
and target (m)
Other objective measures of M&A performance
Acquisition indicator/occurrence of
M&A ()
Age of firm ()
Asset sale rate ()
Capital expenditure rate ()
Deal value ()
Employee growth rate (m)
Export intensity ()
Financial leverage ()
Market share (m)
Number of non-technology
M&As ()
Explanation/note Explaining
M&A
Long-term performance was measured using buy-and-hold
performance
abnormal returns (BHAR) for three to five years from the
date of announcement using a matched sample of firms as
the benchmark return
MacKinley (1997) discussed the methodology of short-term 291
event studies on market return as a measure in detail.
Capron and Pistre (2002) provided detailed on modeling of
CAR based on firm’s return, market return and market
model parameters with pre-event estimation for days 20
to 1 and post-event estimation for days 0 to þ 1
Alpha was the risk-adjusted performance measure that
represents the average return on a portfolio over and
above that predicted by the Fama-French three factor
model (an enhancement of capital asset pricing model,
CAPM), given the portfolio’s beta and the average
market return. This was calculated for three-year post-
acquisition period
This was measured as sum of firm’s annual dividend
per share and annual increase (decrease) in the average
price of its stock divided by previous year’s average
share price
This was measured as the difference between the value of
the combined firm given the acquisition announcement and
the sum of the value of the individual firms if the
announcement had not been made
Indicator for occurrence of an acquisition based on causal
relationship with independent variables
Age of the firm measured in number of years
Asset sales as a percent of the market value of assets at
beginning of year
Capital expenditures as a percent of the market value of
assets at beginning of year
The price paid by the acquirer, based on the target firm’s
assets and characteristics
Change in number of employees as a percent of number of
employees in the previous year, as an indicator for changes
in labor costs in years surrounding the mergers
Total exports as a percent of sales
The proportion of debt used to finance a firm’s assets can
have positive as well as negative effects on the firm’s
performance. If free cash flow is high, it motivates the
managers to use the slack resources to their advantage or to
finance projects with negative present value. On the other
hand, high debt can increases underinvestment problems
The percentage of an industry’s total sales that is earned by
a particular firm
M&As classified as non-technological acquisitions if the
acquired firm did not have any patenting activity during the
five years preceding the acquisition
(continued) Table I.
JSMA Explanation/note
5,3
Number of patents granted post- Number of patents of the acquiring firm obtained during
acquisition (m) one to four years after the M&A
Pension expense per employee (k) Pension expense per employee was used as an indicator for
changes in labor costs in years surrounding the mergers
Proportion of entries by Proportion of entries by acquisition as against greenfield
292 acquisition () investment of arms-length JV/alliance
R&D rate () R&D expenditures as a percent of the market value of assets
at beginning of year
Research intensity () R&D expenses as a percent of sales
Research productivity (m) Total number of non-molecular entities developed by the
pharmaceutical companies under study over total R&D
expenditure over a period of five years
Survival (m) A survival model was developed based on the information
on whether or not an affiliate was still in existence and how
long it has persisted
Tobin’s q (m) The q ratio is calculated as the market value of a firm
divided by the replacement value of the firm’s assets. A high
q (41) implies that a firm’s stock is more expensive than the
replacement cost of its assets
Tobin’s q (three-year moving Prescott and Shi (2008) also studied three year moving
average) (m) average of Tobin’s q
Subjective measures of M&A performance
Acquisition performance- Measured using the acquiring management’s assessment of
subjective assessment (m) the extent to which the original performance expectations
has been met. Schoenberg (2004) uses an instrument
comprising of nine financial performance criteria
synthesized from theoretical and empirical studies of
acquisition objectives
Learning (m) Learning was modeled as an element of acquisition
performance in this study
Long-term corporate Long-term corporate performance was conceptually
performance (m) modeled as an outcome of corporate-level integration,
acquisition activities, geographic diffusion and
interdependence of business units
Quality of innovation (m) Estimation of type of innovative activities in the firm
post-acquisition
Quantity of innovation (m) Estimation of number of innovative activities in the firm
post-acquisition
Satisfaction (m) Satisfaction was modeled as an element of acquisition
performance in this study
Views of analysts on acquisition Assessment of performance based on ratings from analysts
performance () on a Likert scale on whether they agree with the statement
that the acquisition made by the firm generated shareholder
Table I. wealth

The complete list of all explanatory variables with the details of the studies and
respective dependent variables and significance has been documented in Appendix.

6. Discussion
Empirical prediction of M&A performance have limitations in terms of wider
application as the studies are conducted with limited objectives and specific
Explanatory Period of Sample
variable Explanation/note study Author(s) size Dependent variables and significance

Acquirer to target An indicator based on common 1980-2000 André et al. (2004) 267 Alpha from Fama-French three factor
relatedness/ standard industrial model ()
similarity classification (SIC) codes 1970-1990 Finkelstein and Haleblian 96 Acquirer’s long-term market return ( þ )
(2002)
1975-1979 Fowler and Schmidt (1989) na Return on common equity (), total long-term
return to shareholders ( )
1990-2000 Francoeur (2006) na Acquirer’s long-term market return ( þ )
1990-2000 Gerbaud and York (2007) 679 Acquirer’s short-term market
performance/CAR ( )
1996-2006 Kayo et al. (2010) na Acquisition indicator/occurrence of M&A
(þ)
1982-1985 Lien and Klein (2006) 72 Acquirer’s short-term market
performance/CAR ( )
1989-1993 Uhlenbruck and Castro na Sales growth (), ROA ( þ )
(2000)
Acquisition Acquisition experience of 1975-1979 Fowler and Schmidt (1989) na Return on common equity (), total long-term
experience of acquirer. Hayward (2002) has return to shareholders ( )
acquirer used the total number of recent
acquisitions undertaken by the
firm 1999-2003 Grimpe and Hussinger na Deal value ( )
(2008)
1985-1995 Hayward (2002) 214 Acquirer’s short-term market
performance/CAR (), views of analysts ( )
Age of firm Age of firm na Corner and Kinicki (2005) na Return on sales (), ROA ( ), return on capital
employed ( ), return on common equity ( )
1975-1979 Fowler and Schmidt (1989) na Return on common equity ( ), total long-term
return to shareholders ( )
1999-2003 Grimpe and Hussinger na Deal value ( )
(2008)

(continued)
Explaining

performance

M&A performance studies

explanatory variables in
Frequently used
293
M&A

Table II.
 5,3

294
JSMA

Table II.
Explanatory Period of Sample
variable Explanation/note study Author(s) size Dependent variables and significance

Book to market Book value of the acquirer/ 1980-2000 André et al. (2004) 267 Alpha from Fama-French three factor
ratio market value of the acquirer model ()
1990-2000 Francoeur (2006) na Acquirer’s long-term market return ( þ )
Debt-to-equity Ratio of debt to equity (IV) 1998-2006 Kumar and Panneerselvam 417 Acquirer’s short-term market
ratio (2009) performance/CAR ()
1981-1987 Markides (1995) 200 Industry weighted ROS ()
Diversification Nature of investment – whether 1980-1992 Doukas and Lang (2003) na Acquirer’s short-term market performance/
indicator diversifying in nature. Fröhls CAR (), acquirer’s long-term
et al. (1998) evaluated this based market return ()
on SIC code of the partners 1987-1992 Fröhls et al. (1998) na Acquirer’s short-term market
performance/CAR ()
Industry The firm’s industry weighted 2002-2004 Agrawal and Sensarma na Acquisition indicator/occurrence of M&A ()
concentration industry four-firm (2007)
concentration ratio, measured 1978-1989 Hennart and Reddy (1997) 175 Acquisition indicator/occurrence of M&A ( )
with the Herfindahl index 1997-2005 Luypaert and Huyghebaert na Acquisition indicator/occurrence of M&A ( )
(2008)
1981-1987 Markides (1995) 200 Industry weighted ROS ( þ )
1975 Weiner and Mahoney (1981) na Profit (), profitability ( þ ), acquirer’s
long-term market return ( )
Leverage Ratio of long-term debt to the 1988 Agrawal and Knoeber 400 Tobin’s q ( þ )
firm’s market value. Simerly (1996)
and Li (2000) have also
included fixed charge securities
in the form of fixed-charge debt
and preferred stock 1996-2006 Kayo et al. (2010) na Acquisition indicator/occurrence of M&A ( )
1989-1993 Simerly and Li (2000) 700 ROA (), ROI ()

(continued)
Explanatory Period of Sample
variable Explanation/note study Author(s) size Dependent variables and significance

Size of acquirer Size of the acquirer in 1975-1979 Fowler and Schmidt (1989) na Return on common equity (), total long-term
comparison to target. While return to shareholders ( )
Seth et al. (2002) used a relative
measure by taking ratio of sales
volume as the measure; Fröhls
et al. (1998) have used natural
logarithm of total assets of
acquirer as the measure for this 1990-2000 Francoeur (2006) na Acquirer’s long-term market return ( þ )
1987-1992 Fröhls et al. (1998) na Acquirer’s short-term market
performance/CAR ()
1997-2005 Luypaert and Huyghebaert na Acquisition indicator/occurrence of M&A
(2008) (þ)
1998-2006 Nagano and Yuan (2007) na Acquirer’s short-term market
performance/CAR ( )
1981-1990 Seth et al. (2002) na Total short-term gain to acquirer and target
( þ ), acquirer’s short-term market
performance/CAR ( þ )
1989-1993 Simerly and Li (2000) 700 ROA ( þ ), ROI ( þ )
1987-1999 Very et al. (1997) 180 Acquisition performance-subjective
assessment ( )
1975 Weiner and Mahoney (1981) na Profit ( þ ), profitability (), acquirer’s
long-term market return ( þ )

(continued)
Explaining

performance

295
M&A

Table II.
 5,3

296
JSMA

Table II.
Explanatory Period of Sample
variable Explanation/note study Author(s) size Dependent variables and significance

Tobin’s q Ratio between the firm’s total 2002-2004 Agrawal and Sensarma na Acquisition indicator/occurrence of
market value – including (2007) M&A ( þ )
equity and debt – to the
replacement cost of the firm’s
assets 1980-1992 Doukas and Lang (2003) na Acquirer’s short-term market
performance/CAR ( þ ), acquirer’s
long-term market return ( þ )
1987-1992 Fröhls et al. (1998) na Acquirer’s short-term market
performance/CAR ( )
1996-2006 Kayo et al. (2010) na Acquisition indicator/occurrence of
M&A ( þ )
1998-2006 Kumar and Panneerselvam 417 Acquirer’s short-term market
(2009) performance/CAR ( )
 Influence on performance measure
Explaining
Firm-level Industry-level Macro-level M&A
variables variables variables performance
Functional areas Yes No Total Yes No Total Yes No Total Grand total

Finance/accounting 18 18 36 36
Human resources 3 7 10 10 297
Mixed/other 11 16 27 9 6 15 4 3 7 49
Operations 18 11 29 29
Product development, Table III.
engineering and R&D 11 6 17 17 Categorization of
Sales and marketing 6 3 9 9 explanatory variables and
Strategy 17 5 22 22 their influence on
Grand total 84 66 150 9 6 15 4 3 7 172 performance measures

frameworks. The performance measures themselves are diverse owing to

heterogeneous views on what constitutes M&A performance and organization
performance. In this study, the performance measures (dependent variables)
categorized under accounting measures, market measures, other measures and
subjective assessments primarily focus on acquirer’s performance, except for one
measure, target shareholders’ short-term gain that is studied in conjunction with
acquirer shareholders’ gain. The empirical findings support the theory that the short-
term wealth effect for target shareholders is unanimous: these shareholders receive an
average premium within the 20-30 percent range over and above the pre-announcement
share price though there is little consensus about the short-term wealth effects for the
acquirer shareholders (Goergen and Renneboog, 2003). The predominance of acquirer
performance measures is in line with the general perception that M&A is a key
strategic choice of the acquirers and therefore acquirers’ performance in M&A process
tends to be the primary focus of management scholars.
Further analysis of the dependent variables indicates that market performance
measures that are related to shareholders’ value are most common across these studies.
Measures linked to other stakeholders like employees and customers of the firms do
not find prominence. As volumes of M&A literature relate M&A performance to
financial performance of the acquirers or creation of value for shareholders, the choice
of accounting measures and market measures are not surprising. The accounting
measures are mostly the standard measures that we see in financial performance
analysis of any firm.
We do find a variety of measures that are not purely accounting or market
measures, but are indicators of certain specific aspects of operational performance.
The most common among these is Tobin’s q – an indicator of intangible assets or
intellectual capital of the firms, i.e., the unmeasured contribution of knowledge,
goodwill, technology and other intangible assets that a company may have. Though a
large number of studies have used this as a performance variable, the models and
independent variables used by these studies are diverse.
Our categorization of explanatory variables shows that more than 80 percent of
the variables studied are firm-level variables (148 out of 172) and a limited number of
macro-level variables have been studied by the researchers. This indicates the
possibility that the researchers believe that macro-economic or environmental factors
JSMA do not play an influential role in M&A performance. However, we have not found any
5,3 study that has categorically established absence of causal relation between macro-
variables and M&A performance.
We notice significant variation in duration of time for which performance variables
were observed. A few studies observed only short-term performance data – primarily
around the announcement date, while others studied the performance measures for
298 two-five years before and after the announcement date. This indicates that there is no
acceptable viewpoint on the ideal duration for studying an acquisition. As each M&A
tends to be different from another, the acquisition lifecycle activities for all the M&As
do not spread uniformly before and after the announcement. Moreover, if the acquirer
has multiple motives behind an acquisition, then the realization of each of the motives
can occur over different timelines and performance studies should accommodate that.
We also notice that a few researchers restricted their time windows intentionally to
avoid the influence of extraneous variables and the influence of other related M&A
activities of players.
We also notice that majority of the empirical studies use only one category of M&A
performance measures, i.e., accounting measures or market-based measures, and at
times, just a single measure. However, we believe that this is inadequate as neither the
accounting data nor the market performance can fully capture the all the strategic
considerations of M&A and it may be necessary to observe multiple measures of
performance to explain the value creation objectives of M&A. In addition, the motives
behind acquisition must play an important role in choosing the performance variable.
The choice of measures by the researchers leads to another interesting question:
whether availability of data guides the variable selection and performance modeling
process. We notice that except for a few survey-based studies, majority of the studies
used secondary data published by various sources. We believe that there are two issues
with this approach: these post-facto data do not completely represent all the nuances of
an M&A process and non-availability of a data element results in incomplete or
improper model that will fail to explain the performance.
Our discussion would not be complete without reviewing the subjective measures
used in a few studies. While some of these are indicators of M&A success culled out
from survey findings, the others consist of perceptual elements of organizational
performance that are difficult to quantify. However, such measures can throw insights
only if they are linked to stated M&A motives of the acquirer.
We have studied evidences of statistical significance of the explanatory variables
and we notice that a large number of explanatory variables do not show statistical
significance in the tests conducted by the researchers. It is necessary to explore if the
models and construction of tests have any role in these findings.
The choice of control variables, though not included in this study has been found to
be diverse across the studies. While some have chosen and explained the purpose of
using them, other studies have failed to include appropriate control variables to factor
in business cycles, industry effects and regulatory changes among other factors. Such
omissions result in potential confounding effects.

7. Conclusion
As global investment in M&A continue at unprecedented levels in waves over past
decades, acquisition activities have become a focus of academic studies in the fields
of finance, strategy and organizational development. These studies have generated
considerable acquisition-related knowledge, but the findings from these researches
are diverse and lack necessary integration and consolidation. Looking at 30 years of Explaining
M&A research, Cartwright and Schoenberg (2006) have pointed out that inconsistent M&A
M&A performance could be attributed to the fact that the prescriptions from the
academic research were not reaching the practitioner community or the research to performance
date was incomplete in some way. This forces us to question the purpose of M&A
performance studies: can we explain the past events and can we predict the success
of a future event? A secondary question is that even if a comprehensive model explains 299
the past M&A performances, how do the practitioners use the information to make
better decisions while going for an M&A?
Our study corroborates the observation made by King et al. (2004) that past
empirical researches have not consistently identified antecedents for predicting
post-acquisition performance and that there are very little overlap across studies in
the variables used to explain post-acquisition performance. We also notice that the
researchers have constructed performance measures and explanatory variables
depending on their individual study objectives. The time series properties of the
variables have not always been looked at. Though some of the studies have looked into
interaction effects of explanatory variables, we have not seen any work developing
relationships between performance measures (dependent variables).
It is true that M&A motives vary widely and hence should the measures of M&A
performance. However, we notice that the researchers have constructed performance
measures depending on their individual study objectives. Considering the multiplicity
of M&A motives, we need not ask for one best measure, but the linkage between the
measures and the merger motives must be established in such performance
measurement studies. Trautwein (1990) has classified M&A motives under monopoly,
raider valuation, empire building, process and disturbance theory. On similar lines,
Berkovitch and Narayanan (1993) have suggested three major motives for takeovers:
synergy, agency and hubris. Summarizing these, we may state that increasing the
value of the combined firm through synergy is the primary motive of an M&A.
In addition, there may be other additional motives ranging from tax consideration to
diversification (Mukherjee et al., 2004). This should drive the selection and definition of
M&A performance measures and associated explanatory variables. This approach is
in line with some of the methodological best practices suggested by Richard et al.
(2009) for measuring organizational performance.
Therefore, a motive-linked multi-dimensional performance model, combining
measures of accounting performance, market performance and other operational
characteristics may provide answers to some of the key questions plaguing academic
M&A performance research. Subjective measures and perceptual evaluation derived
from key players in M&A transactions and combining them with objective measures
can enrich such a model further. The duration for which the variables are observed
should also be decided based on M&A motives.
It is important to build a common base for future research by reviewing the existing
literature and analyzing the implications of the current gaps. Through this analysis,
we have built a database and identified some of the current gaps in M&A performance
modeling and the opportunities for future work in this space.

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(The Appendix follows overleaf.)

 5,3

304
JSMA

Table AI.

M&A studies
variables in empirical
Summary of explanatory
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance
Appendix

1 # of citations/# Ratio of total forward Product development, F 1999-2003 All Europe Grimpe and na Deal value ( þ )
of patents citations to number of engineering and R&D Hussinger (2008)
patents
2 # XY citations/# Indicates additional Product development, F 1999-2003 All Europe Grimpe and na Deal value ( )
citations citations received from engineering and R&D Hussinger (2008)
patent office for a patent
application
3 Absolute size of Number of the patents Product development, F 1985-1994 High-tech All Cloodt et al. 256 Number of patents
acquired knowledge that the target had engineering and R&D (2006) granted post-
base obtained during the acquisition ()
preceding 5 years before
the particular M&A event
4 Acquirer intangibles/ Intangible assets minus Product development, F 1997-2005 All Europe Luypaert and na Acquisition indicator/
assets goodwill/Total assets engineering and R&D Huyghebaert occurrence of M&A
(2008) (þ)
5 Acquirer to target An indicator based on Operations F 1989-1993 All Europe Uhlenbruck and na Sales growth ( ),
relatedness – vertical whether there is upward Castro (2000) return on assets ( )
integration or downward vertical
integration between
acquirer and target
6 Acquirer to target An indicator based on Operations F 1980-2000 All North André et al. 267 Alpha from Fama-
relatedness/similarity common SIC codes America (2004) French three factor
model ()
7 Acquirer to target Operations F 1970-1990 Manufacturing North Finkelstein and 96 Acquirer’s long-term
relatedness/similarity America Haleblian (2002) market return ( þ )
8 Acquirer to target Operations F 1975-1979 Manufacturing North Fowler and na Return on common
relatedness/similarity America Schmidt (1989) equity ( ), total long-
term return to
shareholders ( )

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

9 Acquirer to target Operations F 1990-2000 All North Francoeur (2006) na Acquirer’s long-term
relatedness/similarity America market return ( þ )
10 Acquirer to target Operations F 1990-2000 All North Gerbaud and 679 Acquirer’s short-term
relatedness/similarity America York (2007) market performance/
CAR ( )
11 Acquirer to target Operations F 1996-2006 All South Kayo et al. na Acquisition indicator/
relatedness/similarity America (2010) occurrence of M&A
(þ)
12 Acquirer to target Operations F 1982-1985 All North Lien and Klein 72 Acquirer’s short-term
relatedness/similarity America (2006) market performance/
CAR ( )
13 Acquirer to target An indicator based on Operations F 1989-1993 All Europe Uhlenbruck and na Sales growth ( ), return
relatedness/similarity common SIC codes Castro (2000) on assets ( þ )
14 Acquisition activity Activities leading to Strategy F na All All Chakrabarty and na Long-term corporate
acquisitions by the firm Mitchell (2004) performance ( )
15 Acquisition experience Acquisition experience of Operations F 1975-1979 Manufacturing North Fowler and na Return on common
of acquirer acquirer America Schmidt (1989) equity ( ), total long-
term return to
shareholders ( )
16 Acquisition experience Operations F 1999-2003 All Europe Grimpe and na Deal value ( )
of acquirer Hussinger (2008)
17 Acquisition experience Sum of recent acquisitions Operations F 1985-1995 All North Hayward (2002) 214 Acquirer’s short-term
of acquirer undertaken by the firm America market performance/
CAR (), views of
analysts ( )
18 Acquisition motive type: This typically suggests Strategy F 1990-2000 All North Gerbaud and 679 Acquirer’s short-term
property-seeking vs which target resources are America York (2007) market performance/
knowledge-seeking being sought and why CAR ( þ )
19 Advertising intensity Sales and marketing F 1985-1995 All Asia 1,489

(continued)
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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

Advertising expenditures Lu and Beamish Return on assets

expressed as a percentage (2004) (, þ ), Tobin’s q (,
of sales þ)
20 Age of firm Age of firm Mixed/other F na Manufacturing North Corner and na Return on sales ( ),
America Kinicki (2005) return on assets ( ),
return on capital
employed ( ), return on
common equity ( )
21 Age of firm Mixed/other F 1975-1979 Manufacturing North Fowler and na Return on common
America Schmidt (1989) equity ( ), total Long-
term return to
shareholders ( )
22 Age of firm Mixed/other F 1999-2003 All Europe Grimpe and na Deal value ( )
Hussinger (2008)
23 Announcement Abnormal return during Finance/accounting F 1980-2000 All North André et al. 267 Alpha from Fama-
period returns the announcement period America (2004) French three factor
model ()
24 Bank loan/debt Bank loans/Total debt Finance/accounting F 1997-2005 All Europe Luypaert and nana Acquisition indicator/
Huyghebaert occurrence of M&A ( )
(2008)
25 Belief homogeneity The extent to which top Mixed/other F na Manufacturing North Corner and na Return on sales ( ),
management team America Kinicki (2005) return on assets ( ),
members hold common return on capital
beliefs employed ( ), return on
common equity ( )
26 Belief richness The comprehensiveness Mixed/other F na Manufacturing North Corner and na Return on sales ( ),
of or number of different America Kinicki (2005) return on assets ( ),
beliefs possessed by the top return on capital
management team

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

employed ( ), return on
common equity ( )
27 Book to market ratio Book value of the acquirer/ Finance/accounting F 1980-2000 All North André et al. 267 Alpha from Fama-
market value of the America (2004) French three factor
acquirer model ()
28 Book to market ratio Finance/accounting F 1990-2000 All North Francoeur (2006) na Acquirer’s long-term
America market return ( þ )
29 Brand equity Advertising expenses as Mixed/other I 1974-1991 All Europe, Asia Anand and na Proportion of entries
a percent of sales in host Delios (2002) by acquisition ( þ )
country
30 Capital expenditure as Capital Expenditure as Finance/accounting F 1981-1987 All North Markides (1995) 200 Industry weighted
% of sales % of Sales America ROS ( þ )
31 Capital structure strategy Capital structure (debt-to- Strategy F 1975 Manufacturing North Weiner and na Profit (), profitability
equity ratio) represents the America Mahoney (1981) (), acquirer’s long-
proportion of financing term market return ()
obtained via debt relative
to equity financing
32 Cash flow EBDIT/Sales Finance/accounting F 2002-2004 All Asia Agrawal and na Acquisition indicator/
Sensarma (2007) occurrence of M&A
(þ)
33 Cash flow deflated by Cash Flow Deflated by Finance/accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
book value of equity Book Value of Equity (IV) Panneerselvam market performance/
(2009) CAR ( )
34 Cash payment Acquisitions fully paid in Strategy F 1990-2000 All North Francoeur (2006) na Acquirer’s long-term
cash or with a mix of cash America market return ( )
and stocks are classified as
cash payment
35 CEO’s firm-specific Use length of time the CEO Human resources F 1988 All North Agrawal and 400 Tobin’s q ( )
human capital in years has been employed by the America Knoeber (1996)

(continued)
Explaining

performance

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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

firm as an indicator of
CEO’s firm-specific human
capital
36 Client mix Ratio of business loans to Operations F 1987 with Banking North Ramaswamy 46 Return on assets ()
consumer loans secondary America (1997)
data for
1984-1990
37 Common product Parent and subsidiary Product development, F 1978-1989 All Asia Hennart and 175 Acquisition indicator/
have one common product engineering and R&D Reddy (1997) occurrence of M&A ( )
38 Composite measure on A composite measure of a Operations F 1985-1995 All Asia Lu and Beamish 1,489 Return on assets
internationalization firm’s FDI activities – (2004) (, þ ), Tobin’s q (, þ )
number of subsidiaries and
the number of countries
where the firm is present
39 Control and reward Level of reprimand and Mixed/other F 1989-1993 All Europe Uhlenbruck and na Sales growth ( ), return
policy reward linked to financial Castro (2000) on assets ( )
performance in the target
40 Corporate integration Implementation of post- Operations F na All All Chakrabarty and na Long-term corporate
acquisition integration, in Mitchell (2004) performance ( )
dimensions of external
diversity (product diversity
and geographic diffusion)
and internal diversity
(system diversity and goal
diversity)
41 Corporation technology Capital to labor ratio in the Operations F 1975 Manufacturing North Weiner and na Profit (), profitability
firm America Mahoney (1981) (), acquirer’s long-
term market return ( )

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

42 Country risk To estimate the risk of Mixed/other M 1989-1993 All Europe Uhlenbruck and na Sales growth ( ), return
foreign direct investment Castro (2000) on assets ( þ )
caused by political and
economic conditions in the
host country the country
risk measures is captured
from the Institutional
Investor
43 Cross-border indicator Indicator based on Mixed/other F 1980-2000 All North André et al. 267 Alpha from Fama-
country of transaction America (2004) French three factor
model ()
44 Debt ratio Total debt/Total assets Finance/accounting F 1997-2005 All Europe Luypaert and na Acquisition indicator/
Huyghebaert occurrence of M&A ( )
(2008)
45 Debt-to-equity ratio Debt to shareholder Finance/Accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
equity ratio Panneerselvam market performance/
(2009) CAR ( )
46 Debt-to-equity ratio Finance/accounting F 1981-1987 All North Markides (1995) 200 Industry Weighted
America ROS ()
47 Degree of Measured by ratio of Operations F 1997-2001 All Asia Gaur and Kumar 240 Return on Sales ( þ ),
internationalization foreign sales to total sales (2009) Return on Assets ( þ )
48 Deregulation Dummy that equals one Mixed/other I 1997-2005 All Europe Luypaert and na Acquisition indicator/
if the corresponding Huyghebaert occurrence of M&A ( )
industry has been (2008)
deregulated and zero
otherwise

(continued)
Explaining

performance

309

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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

49 Developing target Refers to the economic Mixed/other M 1990-2000 All North Francoeur (2006) na Acquirer’s long-term
country development level of the America market return ( )
target countries, whether
the target firm is in a
developing country or in a
developed country
50 Difference in formality Based on survey question Mixed/other F All Europe Schoenberg 129 Acquisition
on management style (2004) performance-
difference between acquirer subjective
and target assessment ( )
51 Difference in funding Based on survey question Mixed/other F All Europe Schoenberg 129 Acquisition
on management style (2004) performance-
difference between acquirer subjective
and target assessment ( )
52 Difference in Based on survey question Mixed/other F All Europe Schoenberg 129 Acquisition
participation on management style (2004) performance-
difference between acquirer subjective
and target assessment ( )
53 Difference in risk Based on survey question Mixed/other F All Europe Schoenberg 129 Acquisition
on management style (2004) performance-
difference between acquirer subjective
and target assessment ()
54 Difference in Based on survey question Mixed/other F All Europe Schoenberg 129 Acquisition
self-reliance on management style (2004) performance-
difference between acquirer subjective
and target assessment ( )

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

55 Difference in system Based on survey question Mixed/other F All Europe Schoenberg 129 Acquisition
on management style (2004) performance-
difference between acquirer subjective
and target assessment ( )
56 Diversification Nature of investment – Strategy F 1980-1992 All North Doukas and na Acquirer’s short-term
indicator whether diversifying in America Lang (2003) market performance/
nature CAR (), acquirer’s
Long-term market
return ()
57 Diversification Based on SIC code of the Strategy F 1987-1992 All North Fröhls et al. na Acquirer’s short-term
indicator partners America (1998) market performance/
CAR ( )
58 Diversification mode Measured according to the Strategy F 1978-1987 All North Busija et al. na Return on assets ( þ ),
relative frequency of America (1997) ROE ( þ ), ROI ( þ ),
acquisition used by the sales growth ( )
firm when entering new
businesses
59 Diversification strategy Diversification strategy is Strategy F 1978-1987 All North Busija et al. na Return on assets ( þ ),
classified under three America (1997) ROE ( ), ROI ( þ ), sales
categories: related- growth ( þ )
constrained, related-linked,
and unrelated
60 Educational diversity Entropy based index of Human resources F na Manufacturing North Corner and na Return on sales ( ),
dispersion of educational America Kinicki (2005) return on assets ( ),
background of top return on capital
management team employed ( ), return on
common equity ( )

(continued)
Explaining

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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

61 Environmental An indicator based on Mixed/other M 1989-1993 All North Simerly and Li 700 Return on assets ( ),
dynamism stability of the industry in America (2000) ROI ( )
which the firm operates
62 Foreign sales as % Foreign Sales as % of Sales and marketing F 1981-1987 All North Markides (1995) 200 Industry weighted
of total sales Total Sales America ROS ( )
63 Form of transaction Merger as form of Strategy F 1980-2000 All North André et al. 267 Alpha from Fama-
transaction America (2004) French three factor
model ()
64 Functional diversity Entropy based index of Human resources F na Manufacturing North Corner and na Return on sales ( ),
dispersion of predominant America Kinicki (2005) return on assets ( ),
functional background of return on capital
top management team from employed ( ), return on
one of 5 possible options common equity ( )
including marketing,
finance/accounting, general
management, engineering
or R&D, and
manufacturing
65 GDP growth Proxy for the market Mixed/other M 1981-1990 All North Seth et al. (2002) na Total short-term gain
seeking motive, calculated America to acquirer and target
by comparing 5 year GDP ( ), acquirer’s short-
growth between acquirer term market
country and target country performance/CAR ( )
66 Geographic diffusion Indicator of spread in Operations F na All All Chakrabarty and na Long-term corporate
geographic operations of Mitchell (2004) performance ( )
the firm due to acquisition

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

67 GNP GNP of the country is Mixed/other M 1975 Manufacturing North Weiner and na Profit ( ), profitability
considered to be an America Mahoney (1981) (), acquirer’s Long-
indication of the degree of term market return
munificence of the (þ)
environment.
Organizations tend to
increase organizational
slack when resources are
available.
68 Goal diversity Intangible differences that Human resources F na All All Chakrabarty and na Long-term corporate
exist in employees and Mitchell (2004) performance ( )
groups of employees within
the organization
69 Governance structure A dummy variable on Mixed/other M 1981-1990 All North Seth et al. (2002) na Total short-term gain
in target countries relative efficiency of America to acquirer and target
different national ( ), acquirer’s short-
governance systems in term market
providing incentives for performance/CAR ( þ )
value creation
70 Government influence Government influence on Mixed/other M 1989-1993 All Europe Uhlenbruck and na Sales growth ( þ ),
acquisition parameters and Castro (2000) return on assets ()
any stake government may
retain in the target
71 Group affiliation Indicator variable on Operations F 1997-2001 All Asia Gaur and Kumar 240 Return on sales ( ),
whether the firm is (2009) return on assets ( )
affiliated to a business
group and
zero otherwise

(continued)
Explaining

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314
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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

72 Herfindahl index change The Herfindahl index Operations F 1980-1992 All North Doukas and Lang na Acquirer’s short-term
change to capture the America (2003) market performance/
influence of the change in CAR (), acquirer’s
the industrial structure of Long-term market
the firm (diversification) return ()
that results from its foreign
investment transaction
73 Herfindahl index from Herfindahl index computed Operations F 1978-1990 All North Lang and Stulz 471 Tobin’s q ()
assets from the firm’s assets per America (1994)
segment
74 Herfindahl index Sum of the squared values Sales and marketing F 1978-1990 All North Lang and Stulz 471 Tobin’s q ()
from sales of sales per segment as a America (1994)
fraction of total firm sales
75 Hostile indicator Indicates that a target Mixed/other F 1975-1979 Manufacturing North Fowler and na Return on common
organization contests a America Schmidt (1989) equity ( þ ), total long-
takeover but loses the term return to
battle shareholders ()
76 Indigestibility Indigestibility of target Mixed/Other F 1978-1989 All Asia Hennart and 175 Acquisition indicator/
firm, a dummy for US?? Reddy (1997) occurrence of
partners which are large M&A ()
and not divisionalized
77 Industry concentration Herfindahl-Hirschman Mixed/other I 2002-2004 All Asia Agrawal and na Acquisition indicator/
index (the sum of the Sensarma (2007) occurrence of
squares of the market M&A ()
shares of each firm in the
corresponding industry)
78 Industry concentration Concentration ratio of U.S. Mixed/other I 1978-1989 All Asia Hennart and 175 Acquisition indicator/
industry entered Reddy (1997) occurrence of M&A ( )

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

79 Industry concentration Mixed/other I 1997-2005 All Europe Luypaert and na Acquisition indicator/
Huyghebaert occurrence of M&A ( )
(2008)
80 Industry concentration Mixed/other I 1981-1987 All North Markides (1995) 200 Industry weighted
America ROS ( þ )
81 Industry concentration Mixed/other I 1975 Manufacturing North Weiner and na Profit ( ), profitability
America Mahoney (1981) ( þ ), acquirer’s long-
term market return ( )
82 Industry sales Total sales volume of the Mixed/other I 1975 Manufacturing North Weiner and na Profit ( ), profitability
industry indicating the America Mahoney (1981) ( ), acquirer’s long-term
level of economic activity market return ( )
within an industry
83 Industry shock Differential of current sales Mixed/other I 2002-2004 All Asia Agrawal and na Acquisition indicator/
growth and the median Sensarma (2007) occurrence of M&A ( )
sales growth of the
industry for the period
under study
84 Industry weighted Firm’s industry-weighted Sales and marketing F 1981-1987 All North Markides 200 Industry weighted
advertising intensity advertising intensity America (1995) ROS ( )
(advertising outlays as a
percent of sales) for the
SIC code
85 Industry Weighted Firm’s industry-weighted Product development, F 1981-1987 All North Markides 200 Industry weighted
R&D Intensity R&D intensity for the SIC engineering and R&D America (1995) ROS ( )
code
86 Industry’s acquisition Fraction of firms acquired Mixed/other I 1988 All North Agrawal and 400 Tobin’s q ( þ )
propensity over the preceding seven America Knoeber (1996)
years within the firm’s two-
digit SIC code

(continued)
Explaining

performance

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JSMA

Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

87 Insider holding of Reported holding of stock Finance/accounting F 1987-1992 All North Fröhls et al. na Acquirer’s short-term
common equity by officers and directors as America (1998) market performance/
percentage of total share of CAR ( þ )
votes
88 Interdependence of Indicator of relation Operations F na All All Chakrabarty and na Long-term corporate
business unit between business units that Mitchell (2004) performance ( )
are vertically related and
those that produce
complementary products
89 International An entropy measure of Operations F 2001-2003 All Europe Vilas-Boas and na Return on sales (),
diversification international Suárez-González Tobin’s q ()
diversification by (2007)
capturing the extension of
sales outside the domestic
market
90 IT spending ratio Ratio of dollar investment Operations F 1988-1993 All North Bharadwaj et al. 631 Tobin’s q ( þ )
in information technology America (1999)
of a firm in time t to the
total sales of the firm in
time t
91 Japanese experience Number of years of Operations F 1978-1989 All Asia Hennart and 175 Acquisition indicator/
presence of the Japanese Reddy (1997) occurrence of
partner M&A ( þ )
in the U.S. market

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

92 Learning Experience of acquirer in Operations F 1996-2006 All South Kayo et al. na Acquisition indicator/
perspective – past acquisition – yearly America (2010) occurrence of
experience average number of M&A ( þ )
transactions accomplished
in the period
of 12 years of analysis
93 Level of know-how of Level of know-how Product development, F 1990-2000 All North Francoeur na Acquirer’s long-term
acquirer incorporates the intangible engineering and R&D America (2006) market return ( þ )
assets as a proportion
of total revenue
94 Level of R&D of Level of R&D is the ratio Product development, F 1990-2000 All North Francoeur na Acquirer’s long-term
acquirer of research expenses to engineering and R&D America (2006) market return ( þ )
total revenue
95 Leverage Ratio of book value Finance/accounting F 1988 All North Agrawal and 400 Tobin’s q ( þ )
of debt to firm value America Knoeber (1996)
96 Leverage Ratio of long term debt Finance/accounting F 1996-2006 All South Kayo et al. na Acquisition indicator/
to the firm’s market value America (2010) occurrence of M&A ( )
97 Leverage Ratio of debt to equity Finance/accounting F 1989-1993 All North Simerly and 700 Return on assets (),
including the use of fixed America Li (2000) ROI ()
charge securities in the
form of fixed-charge debt
and preferred stock
98 Liabilities/assets Liabilities/Assets Finance/accounting F 1999-2003 All Europe Grimpe and na Deal value ( )
Hussinger (2008)
99 Market coverage The number of branches Sales and marketing F 1987 with Banking North Ramaswamy 46 Return on assets ( )
that a bank operates secondary America (1997)
within a territory data for 1984-
1990

(continued)
Explaining

performance

317

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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

100 Marketing Ratio of marketing Sales and marketing F 1987 with Banking North Ramaswamy 46 Return on assets ()
expenditure/revenue expenditure to total bank secondary America (1997)
revenues (marketing data for 1984-
expenditure/revenues) 1990
101 Mode of payment Stock or stock and cash Strategy F 1980-2000 All North André et al. 267 Alpha from Fama-
as mode of payment America (2004) French three factor
model ()
102 Number of M&As are reported as Strategy F 1985-1994 High-tech All Cloodt et al. 256 Number of patents
non-technology technological acquisitions (2006) granted post-
M&As if the acquired firm had acquisition ()
any patenting activity
during the 5 years
preceding the acquisition.
103 Number of preceding Comparing previous Strategy F 1966-1994 All Europe Vermeulen and 21 Survival ( þ ),
acquisitions over expansions of each type: Barkema (2001) proportion of entries
greenfield investments greenfield and acquisition by acquisition ( þ )
104 Operational efficiency Ratio of overhead Operations F 1987 with Banking North Ramaswamy 46 Return on assets ()
expenditure to total bank secondary America (1997)
revenues (overhead/ data for 1984-
revenues) 1990
105 Organizational Financial investments the Strategy F 1989-1993 All Europe Uhlenbruck and na Sales growth ( þ ),
transformation acquirer makes in the Castro (2000) return on assets ( )
target as a percentage of
the sales
of the acquired firm for
each year since acquisition
106 Ownership concentration Sum of the squares of the Finance/accounting F 1997-2005 All Europe Luypaert and na Acquisition indicator/
percentage of the shares Huyghebaert occurrence of
owned by each shareholder (2008) M&A ()

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

107 Ownership: targeted Announced targeted stock Finance/accounting F 1998-2006 All Asia Nagano and na Acquirer’s short-term
stock holding ratio holding ratio by foreign Yuan (2007) market performance/
announced by the acquirer acquirer or domestic CAR ( þ )
acquirer,
108 Patent stock/assets Number of Patents/Assets Product development, F 1999-2003 All Europe Grimpe and na Deal value ( þ )
engineering and R&D Hussinger (2008)
109 Perceived cultural Perception of cultural Human resources F 1987-1999 All North Very et al. (1997) 180 Acquisition
compatibility compatibility between America; performance-
organizations from Europe subjective assessment
different national cultures (þ)
with the same national
culture (domestic mergers)
as a baseline
110 Percentage acquired Percentage of a target Strategy F 1975-1979 Manufacturing North Fowler and na Return on common
firm’s outstanding common America Schmidt (1989) equity ( ), total Long-
stock owned by an term return to
acquiring firm subsequent shareholders ( )
to a tender offer
111 Percentage of equity Percentage of equity owned Finance/accounting F 1988 All North Agrawal and 400 Tobin’s q ( )
owned by 5 percent by 5-percent owners (IV) America Knoeber (1996)
owners
112 Percentage of equity Percentage of shares owned Finance/accounting F 1988 All North Agrawal and 400 Tobin’s q ( )
owned by financial by financial institutions America Knoeber (1996)
institutions
113 Percentage of equity Percentage of shares owned Finance/accounting F 1988 All North Agrawal and 400 Tobin’s q ( )
owned by officers and by officers and directors America Knoeber (1996)
directors

(continued)
Explaining

performance

319

Table AI.
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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

114 Percentage of outside (i.e. Percentage of outside (i.e. Strategy F 1988 All North Agrawal and 400 Tobin’s q ( þ )
non-employee) directors on non-employee) directors on America Knoeber (1996)
the Board the Board (IV)
115 Perception of removal of A construct to assess the Mixed/other F 1987-1999 All North Very et al. (1997) 180 Acquisition
autonomy extent to which the buying America; performance-
firms involved themselves Europe subjective
in the acquired firm’s key assessment ()
decisions, including
acquired firm’s goals,
operational and business
level strategies, personnel
practices, and policies
about major capital
investment
116 Preceding acquisitions in Preceding acquisitions in Strategy F 1966-1994 All Europe Vermeulen and 21 Survival ( þ ),
related domains unrelated/related domains Barkema (2001) proportion of entries
by SIC code by acquisition ()
117 Preceding greenfields in Number of preceding Strategy F 1966-1994 All Europe Vermeulen and 21 Survival (),
familiar markets greenfields in familiar Barkema (2001) proportion of entries
markets vs the number of by acquisition ( þ )
greenfields in new markets
118 Presence of outside Raw percentage of Strategy F 1987-1992 All North Fröhls et al. na Acquirer’s short-term
directors unaffiliated outside America (1998) market performance/
directors on the board CAR ()
119 Product diversity Herfindahl index calculated Product development, F 2001-2003 All Europe Vilas-Boas and na Return on sales ( ),
based on the share of a engineering and R&D Suárez-González Tobin’s q ( )
firm’s sales in each four (2007)
digit SIC industry

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

120 Product of market to Market to Book Ratio of Finance/Accounting F 1998-2006 All Asia Nagano and na Acquirer’s short-term
book ratio of acquirer Acquirer *Cash reserve Yuan (2007) market performance/
and target’s cash reserve divided by total assets of CAR ( þ )
target
121 R&D intensity R&D expenditures Product development, F 1985-1995 All Asia Lu and Beamish 1,489 Return on assets
expressed as a percent of engineering and R&D (2004) (–, þ ), Tobin’s q (–, þ )
sales
122 Ratio of cash flow Ratio of Cash Flow to Total Finance/accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
to total assets Assets (IV) Panneerselvam market performance/
(2009) CAR ( )
123 Ratio of liquid assets Ratio of Liquid Assets to Finance/accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
to book value of assets Book Value of Assets (IV) Panneerselvam market performance/
(2009) CAR ( )
124 Ratio of long-term Ratio of Long-term Debt to Finance/accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
debt to total assets Total Assets (IV) Panneerselvam market performance/
(2009) CAR ( )
125 Ratio of market to Book value of total liability Finance/accounting F 1998-2006 All Asia Nagano and na Acquirer’s short-term
book ratio of acquirer plus market value of capital Yuan (2007) market performance/
and target divided by total assets for CAR ( )
acquirer/Book value of total
liability plus market value
of capital divided by total
assets of target
126 Reduced variability in A measure of the financial Operations F 1981-1990 All North Seth et al. (2002) na Total short-term gain
earnings in different diversification benefit to America to acquirer and target
markets acquirer, constructed from ( þ ), acquirer’s short-
market value of equity in term market
different markets performance/CAR ( )

(continued)
Explaining

performance

321

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Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

127 Relative size of acquired Measured by dividing the Product development, F 1985-1994 High-tech All Cloodt et al. 256 Number of patents
knowledge base absolute size of the engineering and R&D (2006) granted post-
acquired knowledge base acquisition ()
by the absolute size of the
acquiring firm’s knowledge
base
128 Reputation mobility Degree to which intangible Human resources F na All All Saxton (2004) na Acquirer’s long-term
measured through assets of the target firm are market return ( ),
degree of human assets detachable from the learning ( ), market
intensiveness organization and may leave share ( ), satisfaction ( )
after a transaction
129 Reputation Degree to which an Mixed/other F na All All Saxton (2004) na Acquirer’s long-term
transferability acquiring firm may realize market return ( ),
measured through benefits from the positive learning ( ), market
fortune ranking perceptions of the target share ( ), satisfaction ( )
firm among its key
constituents after the
transaction
130 Retained earnings Percent of net earnings Strategy F 1975 Manufacturing North Weiner and na Profit ( ), profitability
strategy retained to explain the America Mahoney (1981) ( ), acquirer’s long-term
strategic choices of the firm market return ( )
management
131 Return on assets Return on Assets Finance/accounting F 1999-2003 All Europe Grimpe and na Deal value ( þ )
Hussinger (2008)
132 Return on investment Acquirer ROI (IV) Finance/accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
Panneerselvam market performance/
(2009) car ( )

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

133 Risk propensity Ratio of core capital to Strategy F 1987 with Banking North Ramaswamy 46 Return on assets ()
loans outstanding secondary America (1997)
data for 1984-
1990
134 Sales growth – industry Sales growth for the Mixed/other I 2002-2004 All Asia Agrawal and na Acquisition indicator/
industry Sensarma (2007) occurrence of M&A ( )
135 Sales per employee Sales per employee Sales & Marketing F 1981-1987 All North Markides (1995) 200 Industry weighted
America ROS ( þ )
136 Salesforce – salesforce Salesforce employment Mixed/other I 1974-1991 All Europe, Anand and na Proportion of entries
employment as percent as percent of overall Asia Delios (2002) by acquisition ( þ )
of overall employment employment in the industry
in host country in host country
137 Salesforce – selling Selling expenses as a Mixed/other I 1974-1991 All Europe, Anand and na Proportion of entries
expenses as a percent percent of sales in the Asia Delios (2002) by acquisition ( þ )
of sales in host country industry in host country
138 Scale economies Median of the natural Mixed/other I 1997-2005 All Europe Luypaert and na Acquisition indicator/
logarithm of total assets of Huyghebaert occurrence of
firms older than ten years (2008) M&A ()
in the corresponding four
digit SIC industry
139 Second acquisition Indicates the firm has Strategy F 1970-1990 Manufacturing North Finkelstein and 96 Acquirer’s long-term
made at least 2 acquisitions America Haleblian (2002) market return ()
during the period of study
140 Size of acquirer Relative size of acquirer Mixed/other F 1975-1979 Manufacturing North Fowler and na Return on common
America Schmidt (1989) equity ( ), total long-
term return to
shareholders ( )

(continued)
Explaining

performance

323

Table AI.
M&A
 5,3

324
JSMA

Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

141 Size of acquirer Size of the acquiring Mixed/other F 1990-2000 All North Francoeur (2006) na Acquirer’s long-term
firm is measured by the America market return ( þ )
magnitude of its revenue,
using the natural logarithm
of total revenues
142 Size of acquirer Log of the market value Mixed/other F 1987-1992 All North Fröhls et al. na Acquirer’s short-term
of the firm’s equity America (1998) market performance/
CAR ()
143 Size of acquirer Natural logarithm of total Mixed/other F 1997-2005 All Europe Luypaert and na Acquisition indicator/
assets Huyghebaert occurrence of
(2008) M&A ( þ )
144 Size of acquirer Natural logarithm of total Mixed/other F 1998-2006 All Asia Nagano and na Acquirer’s short-term
assets of acquirer divided Yuan (2007) market performance/
by that of target in terms CAR ( )
of US dollar
145 Size of acquirer Relative size of the Mixed/other F 1981-1990 All North Seth et al. na Total short-term gain
acquirer measured by America (2002) to acquirer and target
annual sales of ( þ ), acquirer’s short-
target/annual sales of term market
acquirer performance/CAR ( þ )
146 Size of acquirer Mixed/other F 1989-1993 All North Simerly and 700 Return on assets ( þ ),
America Li (2000) return On
investments ( þ )
147 Size of acquirer Relative size of acquirer Mixed/other F 1987-1999 All North Very et al. 180 Acquisition
America; (1997) performance-
Europe subjective assessment
()

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

148 Size of acquirer Mixed/other F 1975 Manufacturing North Weiner and na Profit ( þ ),
America Mahoney (1981) profitability ( ),
acquirer’s long-term
market return ( þ )
149 Stewardship An indicator that reflects Human resources F 1975 Manufacturing North Weiner and na Profit ( þ ),
the influence of the top America Mahoney (1981) profitability ( þ ),
executive on firm acquirer’s long-term
performance market return ( þ )
150 Survivor A measure of relatedness Strategy F 1982-1985 All North Lien and Klein 72 Acquirer’s short-term
relatedness which compares the America (2006) market performance/
observed combinations of CAR ( þ )
activities within firms to
what one would expect if
diversification patterns are
random
151 System diversity Diversity in operational Operations F na All All Chakrabarty na Long-term corporate
framework like and Mitchell performance ( )
incompatible differences in (2004)
financial and management
reporting structures
152 Systematic risk Measured through CAPM’s Finance/accounting F 1996-2006 All South Kayo et al. na Acquisition indicator/
beta, a measure of the America (2010) occurrence of M&A ( )
firm’s non-diversifiable risk
or, in other words, a
measure of the firm’s return
sensibility in relation to the
market return

(continued)
Explaining

performance

325

Table AI.
M&A
 5,3

326
JSMA

Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

153 Target CAR CAR in stock prices of the Finance/accounting F 1982-1985 All North Lien and Klein 72 Acquirer’s short-term
target on acquisition America (2006) market performance/
announcement CAR ( )
154 Target Proxy variable to capture Product development, F 1981-1990 All North Seth et al. na Total short-term gain
intangibles/assets the presence and engineering and R&D America (2002) to acquirer and target
magnitude of intangible ( ), acquirer’s short-
assets in the target firm term market
that are of value in performance/CAR ( )
combination with the
assets of the bidding firm.
It is measured as (annual
R&D, advertising and
marketing expenditure of
target/Annual sales
revenue of target)
155 Team tenure Coefficient of variation (the Human resources F na Manufacturing North Corner and na Return on sales ( ),
standard deviation divided America Kinicki (2005) return on assets ( ),
by the mean) of top return on capital
management team’s tenure employed ( ), return on
in the firm common equity ( )
156 Technological Difference in R&D Mixed/other I 1974-1991 All Europe, Anand and na Proportion of entries
capabilities – difference expenditure intensity Asia Delios (2002) by acquisition ( þ )
in R&D expenditure between host country and
intensity between host home country in the
country and home entered industry
country

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

157 Technological proximity Derived from similarity in Product development, F 1985-1994 High-tech All Cloodt et al. 256 Number of patents
patent codes for the engineering and R&D (2006) granted post-
patents filed by two acquisition ( þ )
companies
158 Technological proximity Indicates if technological Product development, F 1999-2003 All Europe Grimpe and na Deal value ( þ )
proximity between the engineering and R&D Hussinger (2008)
M&A partners is high and
the target firm owns
patents
with a blocking potential
159 Tobin’s q Ratio between the firm’s Finance/accounting F 2002-2004 All Asia Agrawal and na Acquisition indicator/
total market value – Sensarma (2007) occurrence of
including equity and debt – M&A ( þ )
to the replacement cost
of the firm’s assets
160 Tobin’s q Finance/accounting F 1980-1992 All North Doukas and na Acquirer’s short-term
America Lang (2003) market performance/
CAR ( þ ), acquirer’s
long-term market
return ( þ )
161 Tobin’s q Finance/accounting F 1987-1992 All North Fröhls et al. na Acquirer’s short-term
America (1998) market performance/
CAR ( )
162 Tobin’s q Finance/accounting F 1996-2006 All South Kayo et al. na Acquisition indicator/
America (2010) occurrence of
M&A ( þ )
163 Tobin’s q Finance/accounting F 1998-2006 All Asia Kumar and 417 Acquirer’s short-term
Panneerselvam market performance/
(2009) CAR ( )

(continued)
Explaining

performance

327

Table AI.
M&A
 5,3

328
JSMA

Table AI.
Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

164 Total assets Total Assets Finance/accounting F 1999-2003 All Europe Grimpe and na Deal value ( þ )
Hussinger
(2008)
165 Total risk measured Standard deviation of Finance/accounting F 1981-1987 All North Markides 200 Industry weighted
as SD of ROS in ROS in preceding 5 years America (1995) ROS ( þ )
preceding five years
166 Transfer of acquirer’s Survey based construct on Product development, F na All All Capron and 101 Acquirer’s short-term
innovation resources transfer of acquirer’s engineering and R&D Pistre (2002) market performance/
to target innovation resources to CAR ( þ )
target
167 Transfer of acquirer’s Survey based construct on Human resources F na All All Capron and 101 Acquirer’s short-term
managerial resources to transfer of acquirer’s Pistre (2002) market performance/
target managerial resources to CAR ( þ )
target
168 Transfer of acquirer’s Survey based construct on Sales and marketing F na All All Capron and 101 Acquirer’s short-term
marketing resources transfer of acquirer’s Pistre (2002) market performance/
to target marketing resources to CAR ()
target
169 Transfer of target’s Survey based construct on Product development, F na All All Capron and 101 Acquirer’s short-term
innovation resources to transfer of target’s engineering and R&D Pistre (2002) market performance/
acquirer innovation resources to CAR ( )
acquirer
170 Transfer of target’s Survey based construct on Human resources F na All All Capron and 101 Acquirer’s short-term
managerial resources to transfer of target’s Pistre (2002) market performance/
acquirer managerial resources to CAR ( )
acquirer

(continued)
 Macro/
industry Period of Industry Acquirer Sample Dependent variables
No. Explanatory variable Note/definition Functional area /firm study sector region Author(s) size and significance

171 Transfer of Survey based construct on Sales and marketing F na All All Capron and 101 Acquirer’s Short-term
target’s marketing transfer of target’s Pistre (2002) Market Performance/
resources to acquirer marketing resources to CAR ( þ )
acquirer
172 Type of joint venture Dummy variable with a Mixed/other F 1987-1992 All North Fröhls et al. na Acquirer’s short-term
announcement value of 1 when the America (1998) market performance/
announcement states that CAR ( )
the negotiation between the
partners is complete
Explaining

performance

329

Table AI.
M&A
JSMA About the authors
Arindam Das is a Research Scholar at the Indian Institute of Foreign Trade (IIFT), New Delhi.
5,3 His research areas include M&A strategy, cross-border M&A, valuation of intangible assets,
innovation and project management. He has rich experience of working with large corporations
in the technology sector for nearly two decades, has published in international journals and
presented papers in various conferences. He holds a Master’s degree from the Indian Statistical
330 Institute and is a certified PMP. Arindam Das is the corresponding author and can be contacted
at: arindam.iift@gmail.com
Sheeba Kapil is an Associate Professor at the Indian Institute of Foreign Trade (IIFT), New
Delhi in the area of Finance and has more than 12 years of corporate and academic work
experience. She teaches courses on Financial Management, Mergers and Acquisition and
Business Valuation. Her areas of interest include mergers and acquisitions, and valuation of
intangible assets. She has authored several books on Corporate Finance and has several
international and national papers to her credit. She has developed cases for classroom teaching
which have been published by international case depositories and is also actively involved in
executive training and development programs for various organizations and institutes.

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