Do Takeovers Create Value? A Residual Income Approach on UK Data
- Topics:
- Mergers
- Tags:
- Business Operations,
- Corporate Law,
- Finance,
- Financial Accounting,
- Investment,
- Mergers & Acquisitions,
- Operational Accounting,
- Takeover,
- University Of Cambridge
- Source:
- University of Cambridge
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Overview: This paper develops and empirically tests a new methodology for evaluating the financial performance of takeovers. The existing accounting and event study methodologies do not adequately address the key issue of whether takeovers are a positive net present value investment for the acquiring company. The methodology attempts this by employing the residual income approach to valuation, and comparing the present value of the acquirer's future earnings before the acquisition, with those that actually result following takeover.
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Format: PDF | Size: 668KB | Date: Dec 2002 | Pages: 28
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