On average,stockholders in target firms earn higher returns from mergers than the acquiring firm's stockholders.

Question

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Studies have shown that target firm stockholders typically earn higher returns from a merger, while the acquiring firm's stockholders may experience a temporary decline in value. This is due to several factors, including the premium paid by the acquiring firm to acquire the target firm and the potential for increased efficiency and growth opportunities for the combined company. However, there may be exceptions to this trend depending on the specific circumstances of the merger.

On Average,stockholders in Target Firms Earn Higher Returns from Mergers