Dr. Sandra Mortal recently cited in Reuters column
For release: October 20, 2016
Dr. Sandra Mortal, associate professor of Finance, was recently cited in a Reuters column entitled, "Pity the owners of M&A bidding companies," which was written by James Saft. The title of Dr. Mortal's cited paper is "The Post-Acquisition Returns of Stock Deals: Evidence of the Pervasiveness of the Asset Growth Effect." She co-authored this paper with Dr. Michael J. Schill, University of Virginia.
A growing literature finds that firm asset growth rates are negatively correlated to subsequent stock returns. The authors show that the poor post-deal returns that have been documented for stock acquisitions are more precisely explained by the return effects associated with systematically larger asset growth rates for stock deals. They find a similar result for other cross-sectional and time-series acquisition effects, including poor returns for glamour deals, weakly monitored deals, and deals done during high valuation periods. The authors suggest that the distinguishing characteristic associated with poor performing acquisitions is simply their tendency to grow assets.
You can read the Reuters column by clicking here.