When IBM, Google, and Microsoft make a deal to acquire another company, markets tend to pay attention. But what's striking to Cornell researchers is that even when these tech giants and other major U.S. serial acquirers stumble—posting poor returns from their purchases—they keep buying anyway. And that persistence appears to be uniquely American.
Mergers and acquisitions are supposed to create value, yet something unusual happens in the United States: the largest firms keep acquiring smaller companies even when the market signals that their deals aren't working. Around four in five M&A deals globally are made by these serial acquirers, but the way they behave differs sharply between the U.S. and the rest of the world. This distinction raises important questions about why American financial markets tolerate and even enable repeated underperformance in ways that other countries don't.
Andrew Karolyi, dean of the Cornell SC Johnson College of Business, and his colleagues—Rose C. Liao from Rutgers University and Gilberto Loureiro from the University of Minho—analyzed nearly 8,000 serial acquirers involved in more than 33,000 domestic and international deals over several decades to understand what makes the U.S. different. Their findings, published in Critical Finance Review, reveal a striking gap. The top U.S. acquirers saw average stock price increases of around 3.5% following their first acquisition in a three-year window, with persistent returns exceeding 3% for each subsequent deal over the next five years. The poorest U.S. acquirers, by contrast, generated roughly 1% returns over five years—a small but meaningful gap. In non-U.S. markets, that gap between the best and worst performers was only about one-third the size.
The implication is clear: poorly performing acquirers outside America don't get second chances, but U.S. firms do. "Why is governance so important?" Karolyi asked. "Maybe it's because the system allows you to have poorly performing serial acquirers continue acquiring—it's sort of a crucible that allows these poor performers to persist longer than they would otherwise."
Several factors explain this American exceptionalism. One is the prevalence of intangible assets—patents, intellectual property, licensing arrangements—that make U.S. firms, particularly in technology, unusually attractive targets. The U.S. tech industry is laden with a larger fraction of intangible assets compared to firms elsewhere in the world, creating more opportunities for acquirers to justify repeated purchases even when previous deals underwhelm.
The research emerged from a broader question: do theories developed from studying U.S. markets hold true globally? When Karolyi and his team widened their lens to the rest of the world, they found patterns that didn't align with American behavior. Rather than assuming something was wrong with non-U.S. markets, they asked whether something was special about America. "You either wonder, 'What's odd about this other market?' or you start to wonder whether there's something special about the U.S. markets," Karolyi reflected. "If the latter is true, you have to question whether theory should be formulated from the broader evidence."
The research opens new frontiers for understanding how market structure, governance, and economic focus shape corporate behavior. As Karolyi sees it, this work is a jumping-off point. "We hope this will inspire others to take this bigger, global lens and then pursue other explanations," he said, "and then maybe we can come to a really better understanding of this unusual persistence by U.S. serial acquirers."