Eat or be eaten: a theory of mergers and firm size

Gary Gorton, Matthias Kahl and Richard Rosen

No WP-06-14, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: We propose a theory of mergers that combines managerial merger motives and a regime shift that may lead to some value- increasing merger opportunities. Anticipation of the regime shift can lead to mergers, either for defensive or positioning reasons. Defensive mergers occur when managers acquire other firms to avoid being acquired themselves. Mergers may also allow a firm to position itself as a more attractive takeover target and earn a takeover premium. The identity of acquirers and targets and the profitability of acquisitions depend, among other factors, on the distribution of firm sizes within an industry.

Keywords: Bank; mergers (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2006/wp2006_14.pdf (application/pdf)

Related works:
Journal Article: Eat or Be Eaten: A Theory of Mergers and Firm Size (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-06-14

Ordering information: This working paper can be ordered from
publications.chi@chi.frb.org

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese (lauren.wiese@chi.frb.org).