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A unified theory of forward‐ and backward‐looking M&As and divestitures

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  • Qing Ma
  • Susheng Wang

Abstract

In a unified theory of forward‐ and backward‐looking mergers and acquisitions (M&As) and divestitures, an M&A today may be a cause for a divestiture in the future; conversely a divestiture today may be a consequence of an M&A in the past. M&As and divestitures are not only two sides of the same coin, they are also causes and consequences of each other. In this paper, in a two‐period model, two firms consider integrating or separating in each period. We analyze forward‐ and backward‐looking M&As and divestitures, and compare them with static M&As and divestitures.

Suggested Citation

  • Qing Ma & Susheng Wang, 2018. "A unified theory of forward‐ and backward‐looking M&As and divestitures," European Financial Management, European Financial Management Association, vol. 24(3), pages 418-450, June.
    • Handle: RePEc:bla:eufman:v:24:y:2018:i:3:p:418-450
    DOI: 10.1111/eufm.12131
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