Why mergers reduce profits and raise share prices - A theory of preemptive mergers

• 成果类型: Article
• 署名作者: Fridolfsson, SO; Stennek, J
• 署名单位: Research Institute of Industrial Economics (IFN)
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1162/1542476054729455
• 发表日期: 2005
• 页码: 1083-1104
• 关键词: horizontal mergers; corporate-control; acquiring firms; takeovers; equilibrium; acquisitions; OWNERSHIP; gains; event; monopolization

摘要

We provide a possible explanation for the empirical puzzle that mergers often reduce profits, but raise share prices. If being,in insider is better than being an Outsider, firms may merge to preempt their partner merging with a rival. The insiders' stock market value is increased, since the risk of becoming an outsider is eliminated. These results are derived in an endogenous-merger model, predicting the conditions under which mergers occur, when they occur, and how the surplus is shared.