THE IMPACT OF ACQUISITIONS ON COMPANY PERFORMANCE: EVIDENCE FROM A LARGE PANEL OF UK FIRMS

This paper investigates the impact of acquisitions on companyperformance using a large panel of UK-quoted companies observedover a long time period. The results indicate that acquisitionshave a detrimental impact on company performance and that companygrowth through acquisition yields a lower rate of return thangrowth through internal investment. Given the penchant for takeoversin the UK, as witnessed by the record level of takeovers onthe London equity market last year, our findings suggest thatneither firms nor shareholders are being best served by theexisting financial and industrial system.