The Granular Role of Mergers and Acquisitions in Aggregate Fluctuations

Seda Basihos

Janeway Institute Working Papers from Faculty of Economics, University of Cambridge

Abstract: This study investigates the role of firm-specific productivity shocks from mergers and acquisitions (M&A) in explaining aggregate fluctuations. I isolate these shocks by estimating a covariate-adjusted latent factor model on U.S. public firm data (1978–2023) under an event study approach. M&A activity generates significant short-run fluctuations in firm productivity, typically characterized by an initial decline, a rebound to a higher level, and eventual stabilization. A firm-size-weighted average of these shocks explains roughly one-fifth of variations in U.S. economic growth. This result is robust across multiple empirical validations and is not driven by merger waves or prevailing macroeconomic conditions.

Keywords: Aggregate Fluctuations; Granularity; Mergers and Acquisitions; Productivity (search for similar items in EconPapers)
JEL-codes: D22 E32 G34 (search for similar items in EconPapers)
Date: 2025-08-18
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.janeway.econ.cam.ac.uk/working-paper-pdfs/jiwp2523.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camjip:2523

Access Statistics for this paper

More papers in Janeway Institute Working Papers from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().