Merger and Acquisition: Definitions, Motives, and Market Responses

Jenifer Piesse (), Cheng-Few Lee (), Lin Lin and Hsien-Chang Kuo
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Jenifer Piesse: University of London
Cheng-Few Lee: Rutgers University
Lin Lin: National Chi-Nan University
Hsien-Chang Kuo: National Chi-Nan University

Chapter 28 in Encyclopedia of Finance, 2022, pp 877-894 from Springer

Abstract: Abstract Along with globalization, merger and acquisition has become not only a method of external corporate growth, but also a strategic choice of the firm enabling further strengthening of core competence. The mega-mergers in the last decades have also brought about structural changes in some industries, and attracted international attention. A number of motivations for merger and acquisition are proposed in the literature, mostly drawn directly from finance theory but with some inconsistencies. Interestingly, distressed firms are found to be predators and the market reaction to these is not always predictable. Several financing options are associated with takeover activity and are generally specific to the acquiring firm. Given the interest in the academic and business literature, merger and acquisition will continue to be an interesting but challenging strategy in the search for expanding corporate influence and profitability.

Keywords: Acquisition; Efficiency; LBO; Market reaction; Merger; Synergy; Takeover; Takeover financing; Takeover regulations; Wealth effect (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/978-3-030-91231-4_28

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