The Performance of Acquiring Firms in the Nordic Market : Return Characteristics of Single, Traditional, and Programmatic Acquirers

Abstract

This dissertation examines the short- and long-term performance of acquiring firms in the Nordic market from 2006 to 2021. We divide acquirers into three groups and evaluate their performance relative to each other and the market. Our short-term analysis uses an event study to measure the Cumulative Abnormal Return (CAR) generated by acquirers and assess the presence of hubris and learning. The short-term results indicate that single acquirers outperform serial acquirers by 1.34 to 1.56 percentage points, and all acquirers outperform the market by 1.35 to 2.91 percentage points in the event window. Further, our results indicate the presence of hubris and learning, but the effect of hubris appears to dominate learning among Nordic serial acquirers. Three Calendar-Time Portfolios (CTPs) are created to measure longterm performance. The excess returns from the CTPs are estimated using different asset pricing models. In the long term, programmatic acquirers consistently outperform other acquirers and the market by 0.88 to 1.32 percentage points per month. Our findings suggest that this outperformance is associated with a well-defined M&A strategy, aligning with the observations of practitioners.