The Elapsed Time Between Acquisitions

Acquirer cumulative abnormal returns (CARs) have been investigated intensively for more than three decades. CARs measure shareholders’ wealth changes conditional upon a deal announcement. The unconditional acquirer shareholders’ expected profit is, however, the product of the acquirer’s CAR and the probability of making the acquisition. This probability element has been mostly overlooked in the M&A literature. Since the probability cannot be observed directly, we use the time between successive acquisitions as a proxy and provide a systematic empirical analysis of its determinants. JEL classification: G32; G34