Date of Award
12-2009
Degree Type
Dissertation
Degree Name
Ph.D.
Degree Program
Financial Economics
Department
Economics and Finance
Major Professor
Krishnaswami, Sudha
Second Advisor
Demilrap, Ilhan
Third Advisor
Mukherjee, Tarun
Fourth Advisor
Wei, Peihwang
Fifth Advisor
Whitney, Gerald
Abstract
Does efficient internal investment generally translate into successful external investment activities? In this research we use the internal capital allocation efficiency as a proxy for the efficiency of internal investment, and study whether firms that are internally efficient also make efficient external investment decisions. Our sample consists of multi-segment acquirers that announce acquisitions between 1986 and 2003 (only completed deals are included). We estimate short-term and long-term abnormal performance, excess value and operating performance around mergers in order to measure the success of acquisitions (external investment decisions). Our results indicate that internal capital allocation efficiency is indeed a significant factor in the success of acquisition. Firms that are internally efficient also make efficient external investment decisions. Conversely, internally inefficient firms are also externally inefficient. Thus, our results indicate that internal efficiency can be used as a predictor of the success and efficiency of external investment decisions.
Recommended Citation
Ye, Meng, "Efficiency of Internal Capital Allocation and the Success of Acquisitions" (2009). University of New Orleans Theses and Dissertations. 1106.
https://scholarworks.uno.edu/td/1106
Rights
The University of New Orleans and its agents retain the non-exclusive license to archive and make accessible this dissertation or thesis in whole or in part in all forms of media, now or hereafter known. The author retains all other ownership rights to the copyright of the thesis or dissertation.