A Theory of Strategic Mergers

Details

Serval ID
serval:BIB_EBBBB18DDB01
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
A Theory of Strategic Mergers
Journal
Review of Finance
Author(s)
Bernile G., Lyandres E., Zhdanov A.
ISSN
1572-3097
Publication state
Published
Issued date
2012
Peer-reviewed
Oui
Volume
16
Number
2
Pages
517-575
Language
english
Abstract
We examine firms' strategic incentives to engage in horizontal mergers. In a real options framework, we show that strategic considerations may explain abnormally high takeover activity during periods of positive and negative demand shocks. Importantly, this pattern emerges solely as a result of firms' strategic interaction in output markets. We show that the U-shaped relation between the state of demand and the propensity of firms to merge, documented in past studies, is driven by horizontal mergers in industries that are: (1) relatively more concentrated, (2) characterized by relatively strong competitive interaction among firms, and (3) characterized by relatively low merger-related operating synergies and restructuring costs. The empirical evidence, based on parametric and semi-parametric regression analyses, is consistent with these predictions.
Keywords
Mergers, Acquisitions, Restructuring, Corporate Governance
Web of science
Create date
12/11/2010 12:21
Last modification date
21/08/2019 5:17
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