The effect of Q on performance: Evidence from US M&A deals
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2025-07-04
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en
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This thesis investigates the influence of firm valuation, measured by Tobin's Q, on U.S. M&A performance. Contrary to traditional Q-theory, our findings reveal that high-Q acquirers consistently underperform in both short-term market reactions and long-term operating profitability. This could suggests high valuations may be linked to managerial overconfidence and capital misallocation, leading to value-destroying acquisitions.
Furthermore, mergers involving jointly high-Q firms or those within the same industry did not consistently yield superior outcomes. Notably, Q-value mismatches in same-industry mergers negatively impacted long-term performance. This thesis also find that large deal values in high-Q to low-Q transactions did not signal successful capital reallocation and were associated with poorer long-term results.
These findings underscore that managerial discipline and effective post-merger integration are crucial for M&A success rather than only firm valuation or industry overlap. This thesis cautions against uncritically interpreting high valuations or large deal sizes. Future research should explore nuanced measures and qualitative factors impacting M&A outcomes.
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Faculteit der Managementwetenschappen