Trade Relationships, Indirect Economic Links, and Mergers

Jarrad Harford (), Robert Schonlau () and Jared Stanfield ()
Additional contact information
Robert Schonlau: Farmer School of Business, Miami University, Oxford, Ohio 45056
Jared Stanfield: Australian School of Business, University of New South Wales, Sydney, NSW 2052, Australia

Management Science, 2019, vol. 65, issue 7, 3085-3110

Abstract: The economic links between firms created by customer and supplier relationships are critical determinants of those firms’ values and actions. We demonstrate that significant trade relationships and indirect economic links incrementally explain which firms are more likely to be involved in acquisitions, which pairs of firms are more likely to merge, and which mergers will have the greatest impact, both on value and in motivating follow-on mergers by rivals. Firms with major trade relationships are significantly less likely to acquire, or be acquired by, firms that do not share in those relationships.

Keywords: mergers and acquisitions; product market; horizontal; vertical; supply chain; rivals (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (15)

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