We examined a sample of 264 acquisitions by firms listed in KRX (Korea Exchange) from 1998 to 2005. We found the size effect in acquisition announcem ent returns, which is consistent with the study of Moeler, Schlingemann, and Stulz (2004). The announcement abnormal return for small acquirers averages 6.53% compared to 4.84% of large a cquirers. After finding that small firms are better acquirers than large firms, we examined possible explanations for the size effect as folows; First, we investig ated that the small firms' gains might be from the economies of s cales. Second, poor performance may lead to prudent decisions. Third, managements with large free cash flows would make poor acquisitions rather than increase payouts to shareholders. Fourth, firms make acqui sitions when they exhaust their growth oportunities. For these hypotheses to explain the size effect, we test whethe r or not small and large acquirers have different characteristics. The size effect is robust to firm, and it will not