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Antitrust Policy and Mergers: The Wealth Effect of Supreme Court Decisions

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  • McWilliams, Abagail
  • Turk, Thomas A
  • Zardkoohi, Asghar

Abstract

Many believe that antitrust policy has had a dramatic impact on merger strategies in the United States. For this to be true, enforcement of antitrust laws must affect a wide range of firms, not just those firms whose mergers are contested. This study tests whether or not firms engaged in uncontested mergers are affected by antitrust enforcement, as signaled by Supreme Court decisions. Using event study methodology, the authors find that antitrust policy against mergers was binding during the 1960s and 1970s as it lowered the value of targets in uncontested ongoing mergers. Copyright 1993 by Oxford University Press.

Suggested Citation

  • McWilliams, Abagail & Turk, Thomas A & Zardkoohi, Asghar, 1993. "Antitrust Policy and Mergers: The Wealth Effect of Supreme Court Decisions," Economic Inquiry, Western Economic Association International, vol. 31(4), pages 517-533, October.
    • Handle: RePEc:oup:ecinqu:v:31:y:1993:i:4:p:517-33
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    Cited by:

    1. Davis, Yehuda & Govindaraj, Suresh & Suslava, Kate, 2024. "Does the stock market anticipate events and supreme court decisions in corporate cases?," Global Finance Journal, Elsevier, vol. 60(C).
    2. Michael Cichello & Douglas Lamdin, 2006. "Event Studies and the Analysis of Antitrust," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(2), pages 229-245.
    3. Doran, Colin & Stratmann, Thomas, 2021. "How does liability affect prices? Railroad sparks and timber," International Review of Law and Economics, Elsevier, vol. 66(C).
    4. Svetlana B. Avdasheva & Dina V. Tsytsulina, 2014. "The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared," HSE Working papers WP BRP 34/FE/2014, National Research University Higher School of Economics.

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