Arbeitspapier

The effects of mergers: an international comparison

This paper analyzes the effects of mergers around the world over the past 15 years. We utilize a large panel of data on mergers to test several hypotheses about mergers. The effects of the mergers are examined by comparing the performance of the merging firms with control groups of nonmerging firms. The comparisons are made on profitability and sales. The results show that mergers on average do result in significant increases in profits, but reduce the sales of the merging firms. Interestingly, these post merger patterns look similar across countries. We also did not find dramatic differences between mergers in the manufacturing and the service sectors, and between domestic and cross-border mergers. Conglomerate mergers decrease sales more than horizontal mergers. By separating mergers into those that increase profits and those that reduce them and by then examining the patterns of sales changes following the mergers, we determine the effects of mergers on efficiency and market power. Our results suggest that those mergers that decrease profits and efficiency account for a large proportion. However, we can also identify mergers that increase profits by either increasing market power or by increasing efficiency. The first conclusion seems to be a more likely explanation for large companies, whereas the latter is likely to be true for small firms.

Alternative title
Die Effekte von Fusionen: Ein internationaler Vergleich
Language
Englisch

Bibliographic citation
Series: WZB Discussion Paper ; No. FS IV 01-21

Classification
Wirtschaft
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Subject
Mergers
Acquisitions
International Comparison

Event
Geistige Schöpfung
(who)
Gugler, Klaus
Mueller, Dennis C.
Yurtoglu, B. Burcin
Zulehner, Christine
Event
Veröffentlichung
(who)
Wissenschaftszentrum Berlin für Sozialforschung (WZB)
(where)
Berlin
(when)
2001

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Gugler, Klaus
  • Mueller, Dennis C.
  • Yurtoglu, B. Burcin
  • Zulehner, Christine
  • Wissenschaftszentrum Berlin für Sozialforschung (WZB)

Time of origin

  • 2001

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