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What drives merger outcomes?

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  • Jurich, Stephen N.
  • Walker, M. Mark

Abstract

Our study investigates the role that corporate strategy and negotiating procedure play in driving merger outcomes. The term merger outcome refers not only to how a merger announcement affects the combined wealth of the acquiring- and target-firm shareholders, but also to how the managers distribute the gain. We find that expanding the acquiring-firm’s operation geographically and negotiating one-on-one transactions lead to higher combined gains. With regard to the distribution of the gain, we find that acquiring-firm shareholders often receive less of the combined gain when managers initiate acquirer-to-target negotiations. We also find that the percentage of the combined gain that is captured by acquiring-firm shareholders is related positively (negatively) to the size of the acquiring (target) firm.

Suggested Citation

  • Jurich, Stephen N. & Walker, M. Mark, 2019. "What drives merger outcomes?," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 757-775.
    • Handle: RePEc:eee:ecofin:v:48:y:2019:i:c:p:757-775
    DOI: 10.1016/j.najef.2018.08.003
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    Cited by:

    1. Gao, Zaihan & Bao, Yue, 2023. "An investigation of market reaction differences between mega-deals and non–mega deals considering industry concentration," Finance Research Letters, Elsevier, vol. 51(C).
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    3. Jurich, Stephen N. & Walker, M. Mark, 2022. "Initiating contact in merger negotiations: Who leads and who follows?," Journal of Economics and Business, Elsevier, vol. 119(C).

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    More about this item

    Keywords

    Mergers; Negotiation; Bargaining power;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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