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Merger Strategies, Economic Cycles, and Stockholder Value

Author

Listed:
  • Michael Lubatkin

    (Department of Business Environment and Policy, Box U-41B, 368 Fairfield Road, The University of Connecticut, Storrs, Connecticut 06268)

  • Hugh O'Neill

    (Department of Business Environment and Policy, Box U-41B, 368 Fairfield Road, The University of Connecticut, Storrs, Connecticut 06268)

Abstract

Merging continues to be a popular strategic alternative. Since 1983, over 12,200 companies and corporate divisions, worth about a fifth of the market value of all traded stocks, have changed hands. Along with the wave of mergers are persistent myths, one being that stockholders of acquiring firms rarely benefit from mergers.If mergers do not create stockholder value, why do corporate decision makers continue to view mergers as a way to achieve redirection and growth? If mergers do create stockholder value, why is there little supporting evidence? New evidence shows that certain types of mergers completed in certain economic contexts can enhance the wealth of stockholders in the acquiring firms.

Suggested Citation

  • Michael Lubatkin & Hugh O'Neill, 1988. "Merger Strategies, Economic Cycles, and Stockholder Value," Interfaces, INFORMS, vol. 18(6), pages 65-71, December.
    • Handle: RePEc:inm:orinte:v:18:y:1988:i:6:p:65-71
    DOI: 10.1287/inte.18.6.65
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    Cited by:

    1. Hai-Liu Shi & Ying-Ming Wang & Sheng-Qun Chen & Yi-Xin Lan, 2017. "An approach to two-sided M&A fits based on a cross-efficiency evaluation with contrasting attitudes," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(1), pages 41-52, January.
    2. Flanagan, David J. & O'Shaughnessy, K. C., 2003. "Core-related acquisitions, multiple bidders and tender offer premiums," Journal of Business Research, Elsevier, vol. 56(8), pages 573-585, August.
    3. Ioannis Ioannou, 2014. "When Do Spinouts Enhance Parent Firm Performance? Evidence from the U.S. Automobile Industry, 1890–1986," Organization Science, INFORMS, vol. 25(2), pages 529-551, April.

    More about this item

    Keywords

    finance: securities; strategy;

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