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The Premerger Discrimination Between Acquirer and Target Firms = Birleşme Öncesi Satın Alan ve Satın Alınan Firmalar Arasındaki Farklılıklar

Author(s): Alövsat MÜSLÜMOV

Journal: Dogus University Journal
ISSN 1302-6739

Issue: 4;
Start page: 71;
Date: 2001;
Original page

Keywords: Mergers | Acquisitions | Premerger Discrimination | Method of Payment | Book-to Market Ratios | Wilcoxon Signed-Rank Test

This paper examines the premerger discrimination between acquirers and targets using a sample of 56 mergers from U.S. economy. The research findings indicate that acquirers and targets discriminate in terms of size, liquidity and cash flow dimensions, while no statistically significant discrimination are detected in terms of growth potential, past market returns and operating efficiency. The subsample studies show that diversifying mergers aim to exploit cash flow potential of targets, whereas related mergers focus on growth potential. The premerger financial properties of acquirer and targets bear informational clues about method of payment in mergers. Strategic analysis of portfolio shifts show that value acquirers aim to purchase companies with higher growth potential, whereas growth bidders aim to purchase companies with stronger cash flow record.

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