The dynamics of mergers and acquisitions in oligopolistic industries

Dirk Hackbarth and Jianjun Miao

Journal of Economic Dynamics and Control, 2012, vol. 36, issue 4, 585-609

Abstract: This paper embeds an oligopolistic industry structure in a real options framework in which synergy gains of horizontal mergers arise endogenously and vary stochastically over time. We find that (i) mergers are more likely in more concentrated industries; (ii) mergers are more likely in industries that are more exposed to industry-wide shocks; (iii) returns to merger and rival firms arising from restructuring are higher in more concentrated industries; (iv) increased industry competition delays the timing of mergers; (v) in sufficiently concentrated industries, bidder competition induces a bid premium that declines with product market competition; and (vi) mergers are more likely and yield larger returns in industries with higher dispersion in firm size.

Keywords: Anticompetitive effect; Industry structure; Real options; Takeovers (search for similar items in EconPapers)
JEL-codes: G13 G31 G34 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (31)

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Related works:
Working Paper: The dynamics of mergers and acquisitions in oligopolistic industries (2011)
Working Paper: The Dynamics of Mergers and Acquisitions in Oligopolistic Industries (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:36:y:2012:i:4:p:585-609

DOI: 10.1016/j.jedc.2011.12.001

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