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Year 2019, Volume: 19 Issue: 3, 323 - 339, 30.07.2019
https://doi.org/10.21121/eab.536640

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Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers

Year 2019, Volume: 19 Issue: 3, 323 - 339, 30.07.2019
https://doi.org/10.21121/eab.536640

Abstract

This paper investigates the asymmetric behavior of SG&A costs of acquirers,and reveals its effects on M&A performance.It is based on a sample of 6888 M&As completed in the U.S. during the 2003-2015 period and employs panel data regressions.The results show that 73% of the acquirers display asymmetric cost behavior.A significant negative  relation is found between cost stickiness and acquirers'abnormal returns following the merger announcement. Competition in the market for corporate control is positiviley  related with acquirer returns but exacerbates the negative effects of cost stickiness on abnormal returns of the acquirers.The acquirers' risk of default is significantly negatively related to the abnormal returns they generate.This adverse effect of default risk on returns  is stronger for acquirers with anti-sticky costs Acquirer risk offsets the positive effects of competition on returns.Acquirers with sticky costs have lower  abnormal returns than those with anti-stickycosts in a one-year window.The present study contributes to the literature by revealing the asymmetric cost behavior of acquirers involved in merger activity and provides an alternative explanation for the lower abnormal returns of the acquiring firms.

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There are 1 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Mine Uğurlu 0000-0002-1323-4610

Gamze Öztürk Danışman This is me 0000-0003-3684-6692

Seda Bilyay Erdoğan This is me 0000-0001-6701-4448

Çiğdem Vural Yavaş This is me 0000-0002-3440-4762

Publication Date July 30, 2019
Acceptance Date July 4, 2019
Published in Issue Year 2019 Volume: 19 Issue: 3

Cite

APA Uğurlu, M., Öztürk Danışman, G., Bilyay Erdoğan, S., Vural Yavaş, Ç. (2019). Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers. Ege Academic Review, 19(3), 323-339. https://doi.org/10.21121/eab.536640
AMA Uğurlu M, Öztürk Danışman G, Bilyay Erdoğan S, Vural Yavaş Ç. Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers. ear. July 2019;19(3):323-339. doi:10.21121/eab.536640
Chicago Uğurlu, Mine, Gamze Öztürk Danışman, Seda Bilyay Erdoğan, and Çiğdem Vural Yavaş. “Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers”. Ege Academic Review 19, no. 3 (July 2019): 323-39. https://doi.org/10.21121/eab.536640.
EndNote Uğurlu M, Öztürk Danışman G, Bilyay Erdoğan S, Vural Yavaş Ç (July 1, 2019) Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers. Ege Academic Review 19 3 323–339.
IEEE M. Uğurlu, G. Öztürk Danışman, S. Bilyay Erdoğan, and Ç. Vural Yavaş, “Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers”, ear, vol. 19, no. 3, pp. 323–339, 2019, doi: 10.21121/eab.536640.
ISNAD Uğurlu, Mine et al. “Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers”. Ege Academic Review 19/3 (July 2019), 323-339. https://doi.org/10.21121/eab.536640.
JAMA Uğurlu M, Öztürk Danışman G, Bilyay Erdoğan S, Vural Yavaş Ç. Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers. ear. 2019;19:323–339.
MLA Uğurlu, Mine et al. “Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers”. Ege Academic Review, vol. 19, no. 3, 2019, pp. 323-39, doi:10.21121/eab.536640.
Vancouver Uğurlu M, Öztürk Danışman G, Bilyay Erdoğan S, Vural Yavaş Ç. Asymmetric Cost Behavior and Acquirer Returns:Evidence from U.S. Mergers. ear. 2019;19(3):323-39.