Arbeitspapier
Why Mergers Reduce Profits, and Raise Share Prices
We demonstrate a 'preemptive merger mechanism' which may explain the empirical puzzle why mergers reduce profits, and raise share prices. A merger may confer strong negative externalilties on the firms outside the merger. If being an 'insider' is better than being an 'outsider', firms may merge to preempt their partner merging with someone else. Furthermore, the pre-merger value of a merging firm is low, since it reflects the risk of becoming an outsider. These results are derived in a model of endogenous mergers which predicts the conditions under which a merger occurs, when it occurs, and how the surplus is divided.
- Sprache
-
Englisch
- Erschienen in
-
Series: IUI Working Paper ; No. 511
- Klassifikation
-
Wirtschaft
Bargaining Theory; Matching Theory
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Oligopoly and Other Imperfect Markets
- Thema
-
Mergers & acquisitions
definsive merger
coalition formation
antitrust policy
Übernahme
Fusion
Wettbewerbsstrategie
Spieltheorie
Verhandlungstheorie
Theorie
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Fridolfsson, Sven-Olof
Stennek, Johan
- Ereignis
-
Veröffentlichung
- (wer)
-
The Research Institute of Industrial Economics (IUI)
- (wo)
-
Stockholm
- (wann)
-
1999
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Fridolfsson, Sven-Olof
- Stennek, Johan
- The Research Institute of Industrial Economics (IUI)
Entstanden
- 1999
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