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2 Research Method and the Long-Run Performance of Acquiring Firms by

By Philip Brown and Raymond Da Silva Rosa


The long-run performance of successful bidders in a takeover has been controversial. We assess their long-run performance by controlling for survival, firm size, and measurement bias in return cumulation. Measures of the performance of acquiring firms relative to control firms are sensitive to survival constraints implicit in the sampling process and to share return characteristics empirically associated with trading frequency. In the pre-bid and bid periods, the strong share market performance of acquiring firms masks the bias; it is more salient after the bid. Controlling for survival mitigates the new-listing and delisting biases in the pre- and post-bid periods. Keywords

Year: 2011
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