Abnormal returns earned by target firms at the time of initial acquisition announcements are related to form of payment, degree of resistance, and type of offer. Results indicate that interdependence among these characteristics is important. Previous research suggests that tender offer targets earn higher abnormal returns than merger targets. After controlling for payment method and degree of resistance, however, the difference in abnormal returns between tender offers and mergers is insignificant. Resisted offers are associated with insignificantly higher returns than unresisted offers. Abnormal returns associated with cash offers are significantly higher than those associated with stock offers.

The results presented in this paper strongly support the integrative theory of mergers and acquisitions (Finkelstein and Larsson (1999), which suggests that the organizational integration is one of the most important determinants of M&A success. Overall, the EF is negatively correlated with CARs when the entire data set is analyzed. The results suggest that integration processes become more complicated because the employees from the target firm are more resistant to the new culture due to a low level of cultural domination of the acquiring firm. In addition, the results demonstrate that this effect is strongest in 1) within-industry mergers, 2) cross-region mergers, and 3) mergers involving employees with high-valued skill sets. I find significant effects for the EF only in some specific industry groups that require employees with high skill levels and expertise. Additionally, the findings also show that a group of M&A transactions in which target firms' average deal value per acquired employee is high, indicating that the employees have high skill sets and expertise, experiences a particularly strong effect from the EF.