| Scope and method of study. This study provides an empirical illustration of post-acquisition performance in the hotel and restaurant industries, using mergers and acquisitions from 1980 to 2004. At the first stage of analysis, short-term post acquisition performance of hospitality firms was analyzed using stock prices. At the second stage of analysis, accounting-based performance measures including profitability, efficiency, and growth measures were adopted in order to assess long-term post-acquisition performance of acquiring hospitality firms.; Findings and conclusions. Overall, it was found that merger and acquisition announcements have no impact on acquiring hospitality firms' stock prices and insignificant positive impact on acquired firms' stock prices. When the mode of merger was taken into consideration, this study found that investors reacted favorably to tender offers compared to mergers. This phenomenon was more prominent for target hospitality companies. The results exhibit that the merger and acquisition announcements in the hospitality industry were negatively absorbed by the stock market when they were paid by pure stock. On the other hand, merger and acquisition announcements in the hospitality industry were perceived positively when the payments were made by pure cash. Further, this study found that the growth rate of acquiring hotels, as measured by sales divided by the previous year value of sales, decreased significantly following mergers and acquisitions in both 3-year and 5-year tests. (Copies available exclusively from MIT Libraries, Rm. 14-0551, Cambridge, MA 02139-4307. Ph. 617-253-5668; Fax 617-253-1690.)... |
