When do Acquirers Earn Abnormal Returns?

In this study, the authors explore the conditions under which acquirers earn abnormal returns. They provide an empirical test of Barney and Chatterjee's arguments by examining the role of the respective resource contribution of the target and the acquirer. Combining an event study with a survey of post-acquisition resource transfer on a sample of 101 horizontal acquisitions, the authors find that acquirers do not earn abnormal returns when they only receive resources from the target. In this case, it is likely that multiple bidders, which could have equally captured these resources, competed away all the abnormal returns from the successful bidder. In contrast, they find that acquirers can expect to earn abnormal returns when they transfer their own resources to the target. Overall, they find that value creation does not ensure value capture for the acquirer.