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Merger Failures

Albert Banal‐Estañol and Jo Seldeslachts
Authors registered in the RePEc Author Service: Albert Banal-Estanol

Journal of Economics & Management Strategy, 2011, vol. 20, issue 2, 589-624

Abstract: This paper proposes an explanation as to why some mergers fail, based on the interaction between the pre‐ and post‐merger processes. We argue that failure may stem from informational asymmetries arising from the pre‐merger period, and problems of cooperation and coordination within recently merged firms. We show that a partner may optimally agree to merge and abstain from putting forth any post‐merger effort, counting on the other partner to make the necessary efforts. If both follow the same course of action, the merger goes ahead but fails. Our unique equilibrium allows us to make predictions on which mergers are more likely to fail.

Date: 2011
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Citations: View citations in EconPapers (7)

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https://doi.org/10.1111/j.1530-9134.2011.00298.x

Related works:
Working Paper: Merger failures (2009) Downloads
Working Paper: Merger Failures (2005) Downloads
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