On Measuring the Effects of Industrial Mergers

The Effect of a Merger on the Share Price of the Attacker, Revisited

“…The first hypothesis concerns efficient capital markets and the instantaneous rise in share prices on merger The second concerns the benefits eventually accruing to the firm as a result of merger, arising from such things as increased efficiency and enlarged markets. Concerning the second hypothesis, most of the empirical evidence is that merger gains are not realised (Utton, 1974). The results of this paper coincide with this and indicate that, while there were slight share price gains at around the time of merger, there were substantial and significant price decreases in the longer term after the merger.…”

“…In Barnes (1978) it was argued that synergistic benefits from merger were unassured, firstly because modem portfolio theory would imply that they were already incorporated in prices and secondly that the empirical evidence was reasonably unanimous that they were unrealised (Utton, 1974). Since that time two major studies have substantiated such a view (Cowling et al 1980;Weeks and Meeks, 1981).…”

The determinants and effects of actual, abandoned and contested mergers

“…In the studies by Sin& (1971) and Levine and Aaronovitch (1981) the com-parison has involved acquiring and acquired firms before the bid. In other studies, notably by Kuehn (1975), Singh (1975) and Utton (1974), non-acquiring companies have been introduced as a control group. Of particular interest are those studies (e.g.…”

Stock Exchange reactions to monopoly and merger commission reports

“…A traditional approach to this problem has been, to examine the effect of mergers and acquisitions on corporate profitability (e.g. Utton, 1971Utton, , 1974. Here we follow a somewhat different approach, which has as its basis the response of the share price to the merger process (see Dodd and Quek, 1985 for a review of recent literature).…”