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Merger Waves: Are Buyers Following the Herd or Responding to Structural Queues?

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  • Ralph Sonenshine

Abstract

While there has been a significant amount of research covering the causes of merger waves, few papers have rank ordered merger waves based on the causes nor sought to determine which rationale leads to higher bidder payouts. This paper seeks to fill this gap by examining a cross section of large, global mergers across most industries occurring over a 17 year period. I find that merger waves over this period are caused foremost by changing economic and regulatory conditions. It is the behavioral rationale of mispricing, however, that more often leads to higher bidder payouts or merger premiums among acquirers in merger waves.

Suggested Citation

  • Ralph Sonenshine, 2019. "Merger Waves: Are Buyers Following the Herd or Responding to Structural Queues?," Working Papers 2019-03, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:2019-03
    DOI: 10.1007/s40821-019-00136-7
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    File URL: https://doi.org/10.1007/s40821-019-00136-7
    File Function: First version, 2019
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    Cited by:

    1. RAHMAN, Md. Atiqur & USHER, Lauren, 2022. "A Critical Review Of Neoclassical And Behavioural Theories Of Merger Waves," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 26(1), pages 6-22, March.

    More about this item

    Keywords

    mergers and acquisitions; merger premium; behavioral; merger wave;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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