Efficiency of Internal Capital Allocation and the Success of Acquisitions
Does efficient internal investment generally translate into successful external investment activities? In this research we use the internal capital allocation efficiency as a proxy for the efficiency of internal investment, and study whether firms that are internally efficient also make efficient ex...
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ndltd-uno.edu-oai-scholarworks.uno.edu-td-20872016-10-21T17:05:12Z Efficiency of Internal Capital Allocation and the Success of Acquisitions Ye, Meng Does efficient internal investment generally translate into successful external investment activities? In this research we use the internal capital allocation efficiency as a proxy for the efficiency of internal investment, and study whether firms that are internally efficient also make efficient external investment decisions. Our sample consists of multi-segment acquirers that announce acquisitions between 1986 and 2003 (only completed deals are included). We estimate short-term and long-term abnormal performance, excess value and operating performance around mergers in order to measure the success of acquisitions (external investment decisions). Our results indicate that internal capital allocation efficiency is indeed a significant factor in the success of acquisition. Firms that are internally efficient also make efficient external investment decisions. Conversely, internally inefficient firms are also externally inefficient. Thus, our results indicate that internal efficiency can be used as a predictor of the success and efficiency of external investment decisions. 2009-12-20T08:00:00Z text application/pdf http://scholarworks.uno.edu/td/1106 http://scholarworks.uno.edu/cgi/viewcontent.cgi?article=2087&context=td University of New Orleans Theses and Dissertations ScholarWorks@UNO internal capital market acquisition excess value |
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internal capital market acquisition excess value |
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internal capital market acquisition excess value Ye, Meng Efficiency of Internal Capital Allocation and the Success of Acquisitions |
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Does efficient internal investment generally translate into successful external investment activities? In this research we use the internal capital allocation efficiency as a proxy for the efficiency of internal investment, and study whether firms that are internally efficient also make efficient external investment decisions. Our sample consists of multi-segment acquirers that announce acquisitions between 1986 and 2003 (only completed deals are included). We estimate short-term and long-term abnormal performance, excess value and operating performance around mergers in order to measure the success of acquisitions (external investment decisions). Our results indicate that internal capital allocation efficiency is indeed a significant factor in the success of acquisition. Firms that are internally efficient also make efficient external investment decisions. Conversely, internally inefficient firms are also externally inefficient. Thus, our results indicate that internal efficiency can be used as a predictor of the success and efficiency of external investment decisions. |
author |
Ye, Meng |
author_facet |
Ye, Meng |
author_sort |
Ye, Meng |
title |
Efficiency of Internal Capital Allocation and the Success of Acquisitions |
title_short |
Efficiency of Internal Capital Allocation and the Success of Acquisitions |
title_full |
Efficiency of Internal Capital Allocation and the Success of Acquisitions |
title_fullStr |
Efficiency of Internal Capital Allocation and the Success of Acquisitions |
title_full_unstemmed |
Efficiency of Internal Capital Allocation and the Success of Acquisitions |
title_sort |
efficiency of internal capital allocation and the success of acquisitions |
publisher |
ScholarWorks@UNO |
publishDate |
2009 |
url |
http://scholarworks.uno.edu/td/1106 http://scholarworks.uno.edu/cgi/viewcontent.cgi?article=2087&context=td |
work_keys_str_mv |
AT yemeng efficiencyofinternalcapitalallocationandthesuccessofacquisitions |
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1718388095086231552 |