The Impact of Horizontal Mergers on Rivals: Gains to Being Left Outside a Merger

Joseph Clougherty and Tomaso Duso ()

Journal of Management Studies, 2009, vol. 46, issue 8, 1365-1395

Abstract: It is commonly perceived that firms do not want to be outsiders to a merger between competitor firms. We instead argue that it is beneficial to be a non‐merging rival firm to a large horizontal merger. Using a sample of mergers with expert identification of relevant rivals and the event‐study methodology, we find rivals generally experience positive abnormal returns at the merger announcement date. We also find that the stock reaction of rivals to merger events is not sensitive to merger waves; hence, ‘future acquisition probability’ does not drive the positive abnormal returns of rivals. Further, we find the positive (or non‐negative) abnormal returns of rivals to be robust when considering heterogeneity in merger and rival characteristics.

Date: 2009
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Citations: View citations in EconPapers (43)

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https://doi.org/10.1111/j.1467-6486.2009.00852.x

Related works:
Working Paper: The Impact of Horizontal Mergers on Rivals: Gains to Being Left Outside a Merger (2009)
Working Paper: The Impact of Horizontal Mergers on Rivals: Gains to Being Left Outside a Merger (2009)
Working Paper: The Impact of Horizontal Mergers on Rivals: Gains to Being Left Outside a Merger (2008)
Working Paper: The impact of horizontal mergers on rivals: Gains to being left outside a merger (2008)
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