Government Regulation and Structural Change in the Corporate Acquisitions Market: The Impact of the Williams Act

Paul Malatesta () and Rex Thompson

Journal of Financial and Quantitative Analysis, 1993, vol. 28, issue 3, 363-379

Abstract: This paper presents evidence on how the Williams Act affected the corporate acquisitions market. The acquisition process is modeled and three hypotheses about the Act's effects are discussed. These hypotheses imply differing restrictions on how the Act changes the model's parameters. Parameter changes are estimated but we are unable to reliably discriminate between two of the three hypotheses using the classical statistical testing approach, though the third hypothesis is reliably rejected. Bayesian analysis using a diffuse prior is employed to make formal probability comparisons among the hypotheses. The most probable hypothesis, according to the results, implies that the Williams Act reduced the expected gross present value of acquisition attempts.

Date: 1993
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