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The previous research mainly focused to investigate the relationship between types of acquisitions like vertical integration, unrelated acquisitions and related integrations but has not concentrated on the reasons of success. Moreover, many academics have been attracted to the paradigm of corporate acquisition and value creation; however, the results of studies of unrelated and related diversification were mixed (see Lecraw, 1984). For instance, Rumelt (1982) proved that higher profitability is associated with related acquisition comparative to unrelated acquisitions. Similar results has been reported by Christensen and Montgomery (1981) and Varadarajan and Ramanujam (1987).

However, other research like Michel and Shaked (1984) found the evidence that unrelated acquisition outperformed the related acquisition. Likewise, Weston et al (1972) also concluded that unrelated acquisitions performed better than related acquisitions. Furthermore, Luffman and Reed (1984) support this notion by studying the unrelated and related acquisitions activities and reported that firms engaged in unrelated acquisition are in better position to create value in contrast to firms involved in related acquisitions. However, there are some studies such as Grinyer et al, (1990), which did not find any significant difference among various types of acquisition and merger strategies.

In fact, most research was unable to find the exact forces which drive the successful corporate acquisitions modes, as stated earlier; therefore it is difficult to identify the determinants of successful acquisition process. More specifically, empirical evidence, for instance Chattterjee (1986) suggests that horizontal acquisitions outperformed the vertical acquisitions and conglomerates and associated with higher synergies. However, some studies like Lubatkin (1983) proved that vertical acquisitions and conglomerates provided superior performance than horizontal acquisitions.

However, to sum up the previous studies Loughran and Vijh (1997) suggested three typical results from various research studies. Firstly, the stakeholders of target firm gained high abnormal returns from acquisitions activities. Secondly, the shareholders of acquiring firms does not gain abnormal returns or very little from tender offers. Finally, the acquiring company's shareholders gained negative abnormal returns from the merger activities (see Bradley et al, 1983; Kummer and Hoffmeister, 1978; Jensen and Ruback, 1983). In general, evidence from academic research shows that acquisitions and mergers do not create value instead results of acquisitions and mergers are associated with negative returns rather than positive as suggested by Ruback (1988).

Furthermore, these negative abnormal returns are inconsistent with the hypothesis of market efficiency and tend to show that market participant overestimates the anticipated efficiency gains from takeover transactions (see Jensen and Ruback, 1983). In addition, Agrawal et al (1992) suggested three important implications of underperformance findings. Firstly, the hypothesis of capital market efficiency is a very importan本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。