Measuring the Performance of Acquisitions: An Empirical Investigation Using Multiple Criteria


  • The authors would like to thank the Associate Editor (Professor Marc Wouters) and the two anonymous reviewers for their helpful comments and suggestions. They would also like to thank Dr Dimitris Kyriazis (University of Piraeus) and Dr Illias Kapoutsis (Athens University of Economics and Business) for their comments on an earlier draft of this paper.


The performance of corporate acquisitions is a popular research topic. Researchers have employed various criteria in their attempt to evaluate acquisition performance. This paper replicates and extends a previous study by investigating the comparability of the three most widely used measures of acquisition performance, namely accounting-based measures, cumulative abnormal returns and managers' subjective assessments, in a non-Anglo Saxon setting. Empirical testing is based on a sample of 50 domestic acquisitions carried out by Greek firms. Overall, results from the three measures indicate failure rates from 50% to 60%. However, the most impressive finding stems from the comparison (correlation analysis) of the alternative measures. Accounting-based measures are positively correlated to managers' subjective assessments. Contrarily, cumulative abnormal returns are not correlated to either accounting-based measures or managers' subjective assessments. This lack of statistically significant relationships between the performance criteria may provide a plausible basis for explaining some of the contradictory results often reported in the mergers and acquisitions literature. In light of these findings, we discuss their implications for both theory and practice and suggest ideas for future research.