Graduation Year


Date of Submission


Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Murat Binay

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

2019 Nikolaos Papageorgiou


This paper investigates the reliability of the stock market’s initial reaction to M&A announcements as a predictor of actual post-acquisition performance. The two prevailing methods for evaluating M&A performance are event studies (stock market-based measures) and accounting-based measures. The present study combines these two performance evaluation approaches in a single empirical examination. Both the post-merger buy-and-hold abnormal returns and changes in ROA are used as actual post-acquisition performance variables. The acquirer’s cumulative abnormal return (CAR) around the announcement is used as the market predictor variable. An econometric model is employed to test the predictive power of the announcement-period CAR on the actual performance variables using a sample of 3,208 acquisitions by U.S. public companies from 2010 to 2014. This paper’s main contribution lies both in its methodology and its findings: on the one hand, long-term market and accounting variables are used as dependent variables measuring post-acquisition performance. On the other hand, this paper finds that short-term CAR is not a good predictor of subsequent M&A performance. The results suggest that the acquirer’s prior M&A experience is a positive predictor of post-acquisition performance.