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Gains to Bidder Firms Revisited: Domestic and Foreign Acquisitions in Canada

Published online by Cambridge University Press:  06 April 2009

B. Espen Eckbo  and
Karin S. Thorburn
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Abstract

We present large sample evidence on the performance of domestic and U.S. (foreign) bidder firms acquiring Canadian targets. Domestic bidders earn significantly positive average announcement period abnormal returns, while U.S. bidder returns are indistinguishable from zero. Measures of pre- and post-acquisition abnormal accounting performance are also consistent with a superior domestic bidder performance. Domestic bidder announcement returns are, on average, greatest for offers involving stock payment and for the bidders with the smallest equity size relative to the target. Neither direct foreign investment controls, horizontal product market relationships, nor acquisition propensities explain why domestic bidders outperform their U.S. competitors.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 35 , Issue 1 , March 2000 , pp. 1 - 25
Copyright
Copyright © School of Business Administration, University of Washington 2000

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Footnotes

*

Both authors, Amos Tuck School of Business Administration, Dartmouth College, Hanover, NH 03755. The authors are grateful for comments from Jonathan Karpoff, Øyvind Norli, Antonio Mello, and, especially, Paul Malatesta (the editor).

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