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What drives merger outcomes?

Stephen N. Jurich and M. Mark Walker

The North American Journal of Economics and Finance, 2019, vol. 48, issue C, 757-775

Abstract: Our study investigates the role that corporate strategy and negotiating procedure play in driving merger outcomes. The term merger outcome refers not only to how a merger announcement affects the combined wealth of the acquiring- and target-firm shareholders, but also to how the managers distribute the gain. We find that expanding the acquiring-firm’s operation geographically and negotiating one-on-one transactions lead to higher combined gains. With regard to the distribution of the gain, we find that acquiring-firm shareholders often receive less of the combined gain when managers initiate acquirer-to-target negotiations. We also find that the percentage of the combined gain that is captured by acquiring-firm shareholders is related positively (negatively) to the size of the acquiring (target) firm.

Keywords: Mergers; Negotiation; Bargaining power (search for similar items in EconPapers)
JEL-codes: G30 G34 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:48:y:2019:i:c:p:757-775

DOI: 10.1016/j.najef.2018.08.003

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