Skip to main content
Article thumbnail
Location of Repository

Measuring the Performance of Corporate Acquisitions: An Empirical Comparison of Alternative Metrics

By Richard Schoenberg


The choice of performance measure has long been a difficult issue facing researchers. This article investigates the comparability of four common measures of acquisition performance: cumulative abnormal returns, managers' assessments, divestment data and expert informants' assessments. Independently each of these measures indicated a mean acquisition success rate of between 44–56%, within a sample of British cross-border acquisitions. However, with the exception of a positive relationship between managers' and expert informants' subjective assessments, no significant correlation was found between the performance data generated by the alternative metrics. In particular, ex-ante capital market reactions to an acquisition announcement exhibited little relation to corporate managers' ex-post assessment. This is seen to reflect the information asymmetry that can exist between investors and company management, particularly regarding implementation aspects. Overall, the results suggest that future acquisitions studies should consider employing multiple performance measures in order to gain a holistic view of outcome, while in the longer term, opportunities remain to identify and refine improved metri

Publisher: Blackwell Publishing Ltd
Year: 2006
DOI identifier: 10.1111/j.1467-8551.2006.00488.x
OAI identifier:
Provided by: Cranfield CERES

Suggested articles


  1. (1997). An Examination of the Long Run Performance of UK Acquiring Firms’, doi
  2. (2006). Are friendly acquisitions too bad for shareholders and managers? Long term value creation and top management turnover in hostile and friendly acquirers’, doi
  3. (2001). Asset Divestiture Following Horizontal Acquisitions: A Dynamic View’, doi
  4. (1997). Cardinal and W.Glick doi
  5. (1995). Cross-Border Acquisitions: An Examination of the Influence of Relatedness and Cultural Fit on Shareholder Value Creation in US Acquiring Firms’,
  6. (1992). Differential reporting and the European community: a suitable case for treatment’,
  7. (2004). Dimensions of Management Style Compatibility and Cross-Border Acquisition Outcome’. doi
  8. (2004). Do Early Birds Get the Returns? An Empirical Investigation of Early-Mover Advantages in Acquisitions’, doi
  9. (1993). Effects of Executive Departures on the Performance of Acquired Firms’, doi
  10. (2004). Emerging Paradigms doi
  11. (1994). European Cross-Border Acquisition: How Was It for You?’, Long Range Planning, doi
  12. (1987). From Competitive Advantage to Corporate Strategy’. doi
  13. (1998). If Most Mergers Fail Why Are They so Popular?’ doi
  14. (1967). Managerial Perceptions of Organizational Effectiveness’, doi
  15. (1987). Mergers, sell-offs, and economic efficiency.
  16. (2004). Meta-Analyses of the Performance Implications of Cultural Differences doi
  17. (2005). Multinational Acquisition Integration: The Role of National Culture in Creating Synergies’, doi
  18. (1998). National Cultural Distance and Cross-Border Acquisition Performance’, doi
  19. (1994). Optimizing Managerial Decisions during the Acquisition Integration Process’.
  20. (1977). Organization Effectiveness Measurement and Policy Research’, doi
  21. (1991). Organizational fit and Acquisition Performance: Effects of PostAcquisition Integration’, doi
  22. (1997). Predicting Divestiture of Unrelated Acquisitions: An Integrative Model of Ex Ante Conditions’, doi
  23. (1981). Profitability Measures as Indicators of Post-Merger Efficiency’, doi
  24. (1990). Relationships Between Type of Acquisition, The Autonomy Given to the Acquired Firm, and Acquisition Success: An Empirical Analysis’, doi
  25. (1997). Relative Standing and the Performance of Recently Acquired European Firms’, doi
  26. (1985). Retrospective Reports of Strategic-Level Managers: Guidelines for Increasing their Accuracy’, doi
  27. (2001). The Acquisition Process as a Learning Process: Evidence from a Study of Critical Problems and Solutions in Domestic and Cross-Border Deals’, doi
  28. (1969). The Adjustment of Stock Prices to New Information’, doi
  29. (2006). The Impact of Leadership and Change Management Strategy on Organizational Culture and Individual Acceptance of Change During a Merger’, doi
  30. (1990). The Impact of Mergers and Acquisitions on People at Work: Existing Research and Issues’, doi
  31. (1999). The Long Term Performance of Horizontal Acquisitions’, doi
  32. (1989). The Profitability of Mergers’, doi
  33. (1992). The Success of Acquisitions: Evidence from Divestitures’, doi
  34. (1986). Towards Reconciliation of Market Performance Measures to Strategic Management Research’, doi
  35. (1997). Using Single Respondents in Strategy Research’, doi
  36. (2002). When Do Firms Learn From Their Acquisition Experience? Evidence from 1990-1995’, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.