WERE THE 1982 MERGER GUIDELINES OLD NEWS?

Alan J Meese and Sarah L Stafford

Journal of Competition Law and Economics, 2017, vol. 13, issue 4, 577-608

Abstract: This paper examines the impact of the 1982 Department of Justice Merger Guidelines on the stock market prices of publicly traded firms in the United States. We argue that those Guidelines were perceived by the market as a real change in enforcement policy that would result in substantial deregulation of mergers throughout the economy. We conduct an event study of S&P 500 firms to test this hypothesis and find evidence of a significant positive effect on the stock prices of firms in moderately concentrated industries subject to antitrust regulation, the firms for which the 1982 Guidelines articulate a substantially less intrusive enforcement policy. However, the announcement does not have any significant effect on firms in less concentrated industries or those that are highly concentrated. These results are robust to a number of different sensitivity analyses and thus we conclude that market actors believed the 1982 Guidelines contained new information.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:13:y:2017:i:4:p:577-608.

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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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