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What drives merger outcomes?

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  • Jurich, Stephen N.
  • Walker, M. Mark

Abstract

Our study investigates the role that corporate strategy and negotiating procedure play in driving merger outcomes. The term merger outcome refers not only to how a merger announcement affects the combined wealth of the acquiring- and target-firm shareholders, but also to how the managers distribute the gain. We find that expanding the acquiring-firm’s operation geographically and negotiating one-on-one transactions lead to higher combined gains. With regard to the distribution of the gain, we find that acquiring-firm shareholders often receive less of the combined gain when managers initiate acquirer-to-target negotiations. We also find that the percentage of the combined gain that is captured by acquiring-firm shareholders is related positively (negatively) to the size of the acquiring (target) firm.

Suggested Citation

  • Jurich, Stephen N. & Walker, M. Mark, 2019. "What drives merger outcomes?," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 757-775.
    • Handle: RePEc:eee:ecofin:v:48:y:2019:i:c:p:757-775
    DOI: 10.1016/j.najef.2018.08.003
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    Cited by:

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    3. Jheyce Milena Silva Barros & Brigitte Renata Bezerra Oliveira & Telma Lúcia Andrade Lima & Marcos Felipe Falcão Sobral, 2024. "Corporate strategy evaluation (CORE): a new method to measure strategies in organizations," SN Business & Economics, Springer, vol. 4(6), pages 1-18, June.
    4. Stephen N. Jurich & M. Mark Walker, 2021. "Deal motivations and bargaining power: do executives show their hand in SEC filings?," SN Business & Economics, Springer, vol. 1(4), pages 1-28, April.

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    More about this item

    Keywords

    Mergers; Negotiation; Bargaining power;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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