Resumen de Who makes acquisitions? An empirical investigation of restaurant firms

Tarik Dogru, Ozgur Ozdemir, Murat Kizildag, Aysa Ipek Erdogan

• The purpose of this study is to examine the financial and operational factors that explain acquisitiondecisions in restaurant firms. We analyze the effects of franchising, dividends, leverage, Tobin’sQ,total assets, sales growth, and cash flows on restaurant firms’ acquisition decisions. The findingsshow that firms with high growth prospects and excess cash flows (i.e. small firms and franchisingrestaurant firms) are more likely to make acquisitions than their counterparts. Furthermore, firmswith higher dividend payouts are less likely to engage in acquisition deals due to lack of cash.Shareholders perceive acquisitions to be value-decreasing only if large restaurant firms (notnecessarily franchising) make acquisitions, while shareholders perceive acquisitions to be value-increasing when franchising firms make acquisitions. The findings provide partial support for thepostulations of overinvestment and underinvestment theories. Theoretical and practical implica-tions are discussed.