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Merger waves: are buyers following the herd or responding to structural queues?

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  • Ralph Sonenshine

    (American University)

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, 2020. "Merger waves: are buyers following the herd or responding to structural queues?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 287-308, June.
    • Handle: RePEc:spr:eurasi:v:10:y:2020:i:2:d:10.1007_s40821-019-00136-7
    DOI: 10.1007/s40821-019-00136-7
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    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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