Horizontal mergers, collusion, and stockholder wealth

Eckbo, B. Espen

doi:10.1016/0304-405x(83)90013-2

Cited by 757 publications

(523 citation statements)

References 14 publications

Supporting

Mentioning

418

Contrasting

Unclassified

Order By: Relevance

“…Several follow-up studies tackle the same issue. Schumann (1993) conducts an event study analysis of 37 acquisitions that were challenged by the FTC over the period [1981][1982][1983][1984][1985][1986][1987] and comes up with the same pattern of abnormal returns as in Eckbo (1983) and Eckbo and Wier (1985). He reports positive abnormal returns to rivals around the antitrust complaint, which are positive and larger for smaller rivals.…”

Section: Literaturementioning

confidence: 99%

How effective is European merger control?

Duso

Gugler

Yurtoğlu

2011

European Economic Review

View full text Add to dashboard Cite

This paper applies a novel methodology to a unique dataset of large concentrations during the period 1990-2002 to assess merger control's effectiveness. By using data gathered from several sources and employing different evaluation techniques, we analyze the economic effects of the European Commission's (EC) merger control decisions and distinguish between blockings, clearances with commitments (either behavioral or structural), and outright clearances. We run an event study on merging and rival firms' stocks to quantify the profitability effects of mergers and merger control decisions. We back up our results and methodology by using alternative measures for the merger's profitability effects based on balance-sheet data and obtain consistent results. Our findings suggest that outright blockings solve the competitive problems generated by the merger. Remedies are not always effective in solving the market power concerns, at least not on average. Nevertheless, both structural (divestitures) and behavioral remedies do help restore effective competition when correctly applied to anticompetitive mergers during the first investigation phase. Yet, they are on the whole ineffective or even detrimental when applied after the second investigation phase. Finally, remediesespecially behavioral ones -seem to constitute a rent transfer from merging firms to rivals when mistakenly applied to pro-competitive mergers.

show abstract

Section: Literaturementioning

confidence: 99%

How effective is European merger control?

Duso

Gugler

Yurtoğlu

2011

European Economic Review

View full text Add to dashboard Cite

show abstract

“…Therefore, as far as the acquirer's returns are concerned, the preliminary results of literature reviews are ambiguous. Where Dodd (1980), Chang (1998) and Mitchell and Stafford (2000) confirmed that the acquirer's shareholders suffer losses, on the other hand, Asquith (1983) and Eckbo (1983) found positive abnormal returns for the acquirer firms' shareholders.…”

Section: Review Of Literaturementioning

confidence: 76%

Creating shareholders' value utilising capital in post-merger and acquisition scenario: a study of Indian Telecom Industry

Verma

Sharma

2017

IJMP

View full text Add to dashboard Cite

Abstract:Whether a planned Mergers and Acquisitions (M&As) transaction will prove beneficial in future or not has been the issue of ongoing debate amongst corporate. The present study, thus, focuses on Indian Telecom Industry to analyse the acquirer firms' performance in creating shareholders value in the post-M&A scenario with respect to utilising capital before the M&A. This research paper studies the shareholders value effects of M&As in the Indian Telecom Industry that took place during the period of 2000-2001 to 2009-2010. Accounting-study methodology has been undertaken to study the shareholders value creation in the long-run post-M&A period. The results of the study show that the acquirer firms, before utilising capital for large-scale M&As as a part of their strategic decision process, do not rationally acknowledge whether the firms are capable of creating or rather protecting the shareholders' value in the post-M&A scenario.

show abstract

“…12;2013 In cases of legally challenged mergers, the hypothesis is that it could provide negative abnormal return for the rival firms, when the merger is challenged, because it would mean reducing the possibility of the realization of what presumably comes due to the generation of a greater market power. Eckbo (1983), however, finds positive but statistically insignificant results.…”

Section: Anticompetitive Effects and Pursuit Of Monopoly Powermentioning

confidence: 87%

“…Based on studies that analyzed the performance of stock prices of companies that underwent mergers, Stillman (1983) and Eckbo (1983) reject the hypothesis of market power. Researches show that rival firms do not benefit from higher prices and have no abnormal gains.…”

Section: Anticompetitive Effects and Pursuit Of Monopoly Powermentioning

confidence: 99%

Motives Involved in the Processes of Mergers in Credit Unions: A Study in Minas Gerais, Brazil

Silva¹,

Lacerda²,

Melo³

et al. 2013

IBR

View full text Add to dashboard Cite

This study aims to identify the reasons that led credit unions in the State of Minas Gerais, Brazil, to carry out processes of incorporation, based on the motives included in the theory of the firm and the agency theory: asymmetrical expectations, compensation and tax incentives, replacement costs and market values, seek for economies of scale, anticompetitive effects and pursuit of monopoly power and reducing the risk of insolvency. We investigated four credit unions that have undergone processes of mergers from 2008 to 2011, by interviewing six managers who participated in the processes of incorporation. Compensation and tax incentives, anticompetitive effects and pursuit of monopoly power were not motivating factors, but we identified the seek for economies of scale as a motivation in all the cooperatives studied. We observed that the cooperative has an organizational structure distinct from other kinds of business, but there is a similarity in their merging processes, because the underlying reasons inserted in the theory of the firm and the agency theory were identified as triggers for the mergers.

show abstract

Horizontal mergers, collusion, and stockholder wealth

Cited by 757 publications

References 14 publications

How effective is European merger control?

How effective is European merger control?

Creating shareholders' value utilising capital in post-merger and acquisition scenario: a study of Indian Telecom Industry

Motives Involved in the Processes of Mergers in Credit Unions: A Study in Minas Gerais, Brazil

Contact Info

Product

Resources

About