ABSTRACT
A significant share of merger and acquisition (M&A) research is dedicated to unraveling their performance outcomes. Most research assumes acquisitions improve performance, but acquisition performance is a multi-dimensional construct and selection of performance measures needs to be part of the initial research design and this requires an understanding of differences in performance measures. Stock market measures of acquisition performance are the most commonly applied measure in M&A research. Short-term stock market measures in acquisition research may downwardly bias abnormal returns due to the implicit assumption all needed information to accurately price the impact of an acquisition is available to the market when it is announced. Acquisitions also can display non-financial motives. The chapter discusses two that would make the use of acquisitions rational or provide insights into resource transfer – innovative performance and firm survival. Research focused on how acquisition capabilities form and what are the more important factors of an acquirer’s capability is needed.
