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The drivers of merger waves

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  • Kastrinaki, Zafeira
  • Stoneman, Paul

Abstract

A reduced form hazard rate model of merger timing, estimated using a uniquely constructed 1990–2004 UK panel data set, shows clear correlations between the observed wave-like pattern of merger activity and both exogenous and endogenous drivers with firm characteristics acting as intermediaries.

Suggested Citation

  • Kastrinaki, Zafeira & Stoneman, Paul, 2012. "The drivers of merger waves," Economics Letters, Elsevier, vol. 117(2), pages 493-495.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:2:p:493-495
    DOI: 10.1016/j.econlet.2012.06.043
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    References listed on IDEAS

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    1. Toxvaerd, Flavio, 2008. "Strategic merger waves: A theory of musical chairs," Journal of Economic Theory, Elsevier, vol. 140(1), pages 1-26, May.
    2. Jie Cai & Anand M. Vijh, 2007. "Incentive Effects of Stock and Option Holdings of Target and Acquirer CEOs," Journal of Finance, American Finance Association, vol. 62(4), pages 1891-1933, August.
    3. Shleifer, Andrei & Vishny, Robert W., 2003. "Stock market driven acquisitions," Journal of Financial Economics, Elsevier, vol. 70(3), pages 295-311, December.
    4. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    5. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
    6. Dickerson, Andrew P. & Gibson, Heather D. & Tsakalotos, Euclid, 2002. "Takeover risk and the market for corporate control: the experience of British firms in the 1970s and 1980s," International Journal of Industrial Organization, Elsevier, vol. 20(8), pages 1167-1195, October.
    7. Sven-Olof Fridolfsson & Johan Stennek, 2005. "Why Mergers Reduce Profits And Raise Share Prices-A Theory Of Preemptive Mergers," Journal of the European Economic Association, MIT Press, vol. 3(5), pages 1083-1104, September.
    8. Boyan Jovanovic & Peter L. Rousseau, 2002. "The Q-Theory of Mergers," American Economic Review, American Economic Association, vol. 92(2), pages 198-204, May.
    9. Offenberg, David, 2009. "Firm size and the effectiveness of the market for corporate control," Journal of Corporate Finance, Elsevier, vol. 15(1), pages 66-79, February.
    10. Inês CABRAL, 2002. "A Herding Approach to Merger Waves," Economics Working Papers ECO2002/26, European University Institute.
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    Cited by:

    1. Bayiley, Yitbarek Takele & Redae, Haben Mehari, 2022. "Domestic Bank Merger and Acquisition in Ethiopia: a prudent strategy for efficiency and synergy gain," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 26(1), April.

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    More about this item

    Keywords

    Hazard models; M&A waves; M&A timing;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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