The Aggregate Implications of Mergers and Acquisitions

• 成果类型: Article
• 署名作者: David, Joel M.
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Chicago
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdaa077
• 发表日期: 2021
• 页码: 1796-1830
• 关键词: capital reallocation; infer overpayments; firm dynamics; MARKET; price; PRODUCTIVITY; incentives; allocation; INNOVATION; synergies

摘要

This article develops a search and matching model of mergers and acquisitions (M&A) and uses it to evaluate the implications of merger activity for aggregate economic outcomes. The theory is consistent with a rich set of facts on U.S. M&A, including sorting among merging firms, a substantial merger premium and serial acquisition. It provides a sharp link between these facts and the nature of merger gains. At the micro-level, both complementarities between merging firms and productivity improvements of target firms are important in generating gains. At the macro-level, the model suggests a significant beneficial impact of M&A on aggregate outcomes-the contribution to steady state output is 14% and 4% for consumption-which occurs through the reallocation of resources across firms and equilibrium effects on firm selection and new entrepreneurship. Nevertheless, the economy is not efficient, suggesting a scope for policy improvements-a simple flat tax on M&A can raise steady state consumption as much as 2% relative to the laissez-faire equilibrium. In short, the boundaries of the firm can matter for macroeconomic outcomes.