Accounting Rates of Return as Measures of Post-Merger Perfor Mance

Accounting rates of return are used widely in empirical studies to assess postmerger perfor Mance and to compare this perfor Mance with that of non-merged firms. This paper suggests that there are many problems involved. In particular, accounting rates of return are unreliable measures of post-merger perfor Mance, and introduce bias into the results of post-merger perfor Mance studies.