Short-term performance of Norwegian serial acquirers: An empirical analysis of bidder announcement returns

Abstract

This thesis studies the short-term performance of Norwegian serial acquirers by investigating bidder announcement returns. For a long time, there has been no clear evidence of whether the net performance of serial acquirers is positive or negative in the short term. On one hand, when a company engages in numerous acquisitions over time, it may develop strategic momentum and M&A experience that can last over a longer period and create substantial value for its shareholders. On the other hand, factors such as CEO hubris, overconfidence, diminishing returns schedules, and integration problems decrease the probability of deal success. While several studies analyse the performance of serial acquirers, to the best of our knowledge, there is no study on short-term performance on Norwegian serial acquirers. Applying the event study methodology, we analyse a sample of 377 acquisitions by Norwegian public companies from 1996 to 2020. Based on a firm’s M&A strategy in time, the sample is divided into serial-, occasional, and single acquirers. We find evidence that serial acquirers engage in wealth-creating acquisitions with a significant average cumulative abnormal return of 0.861% in the (-1, +1) event window. Comparing average cumulative abnormal returns to both occasional- and single acquirers, serial acquirers perform significantly lower in all event windows ranging from (-3, +3) to (0). Controlling for deal- and firm characteristics, we find that serial acquirers underperform relative to other acquirers by -1.72%. Lastly, captured by bidder-fixed effects, serial acquirers seem to possess some unobserved time-invariant characteristics beyond other types of acquirers.