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Inter-firm linkages and M&A returns

Marcin W. Krolikowski, Hari P. Adhikari, James Malm and Nilesh B. Sah

The Quarterly Review of Economics and Finance, 2017, vol. 63, issue C, 135-146

Abstract: This study investigates the value of customer/supplier relationships in mergers and acquisitions. The findings indicate that targets (suppliers) with strong customer/supplier relationships obtain higher abnormal returns and higher merger premiums when compared to targets with weak customer/supplier relationships. However, targets with a strong connection to a customer have a lower chance of being acquired. Acquirers that purchase targets with strong customer/supplier relationships have negative long run abnormal returns suggesting that the acquirers may have overpaid for these targets. The implications of customer/supplier relationships on customers, rivals, and competing rivals are presented.

Keywords: Mergers; Acquisitions; Networks; Contracting (search for similar items in EconPapers)
JEL-codes: G34 L14 L25 (search for similar items in EconPapers)
Date: 2017
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