Financial economists seem to believe that takeovers are partly motivated by the desire to improve poorly-performing firms. However, prior empirical evidence in support of this inefficient management hypothesis is rather weak. We provide a detailed reexamination of this hypothesis in a...

While the bulk of the research on the financial performance of mergers and acquisitions has focused on stock returns around the merger announcement, a surprisingly large set of papers has also examined long-run stock returns following acquisitions. We review this literature, concluding that...