Mergers and acquisitions in Germany: 1981-2010

We examine the long-term performance of German acquiring firms for M&A transactions that took place between 1981 and 2010. Over this period, the German corporate governance system experienced substantial changes that led to the emergence of an active M&A market. In contrast to many U.S. studies, we do not find significant negative abnormal long-term performance for our full sample. However, the results support the method-of-payment hypothesis. For our first subsample, from 1981 to 1990, when M&A transactions were rather rare, acquirers exhibit positive abnormal long-term returns compared to their German industry peers. Our findings are robust for various firm and deal characteristics and consistent with our analysis of pre and postmerger operational performance and announcement returns.