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

This paper investigates the impact of acquisitions on company performa nce using a large panel of UK-quoted companies observed over a long ti me period. The results indicate that acquisitions have a detrimental i mpact on company performance and that company growth through acquisiti on yields a lower rate of return than growth through internal investme nt. Given the penchant for takeovers in the UK, as witnessed by the re cord level of takeovers on the London equity market last year, our fin dings suggest that neither firms nor shareholders are being best serve d by the existing financial and industrial system.