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t concept in corporate finance and systematic poor performance from post-merger transaction is inconsistent with this hypothesis. Secondly, they argued that most performance research examines the returns around announcement dates by implicitly assuming that markets are efficient and therefore ignore the examination of post announcement returns. Hence they noted that market inefficiency findings on post announcement basis could be calls into question. Finally, the findings of underperformance might show poor accounting performance of firms after the merger or acquisition transaction. However, there are studies such as Healy et al (1992), which provided opposite results.

Likewise the study by Mercer Management Consulting found that since mid-80s, 57 percent of merger and acquisitions deals, which worth $500 million or more generated poor results over the period of three years after the acquisition transaction comparative to industry average. Further findings of the study were that during 1990s, the success rate of the acquisition transaction was barely 50 percent (p.39, cited in Smith and Hershman, 1997).

Finally, we can assert that acquiring firms underperformed market after the acquisition, as suggested by most research such as Agrawal et al (1992) examined the post merger performance of companies and reported that acquiring companies underperformed by 10% on average in post-acquisition period over the five years. However, they also argued that it is still an unsettled issue in finance literature and it depends upon how the performance is measured.

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