Detecting Mergers and Acquisitions Effects on Performance, Efficiency, and Productivity with a Bootstrap Mixed Logit Approach: Evidence from Greece

In this paper, we examine the effects on performance, efficiency, and productivity of horizontal and vertical mergers and acquisitions (M&As) in the Greek manufacturing sector during the period 1995 – 2002. The purpose is to determine whether M&As actually do enhance the value of acquired firms, thus offering synergy gains, or if they tend to be value-neutral or value-reducing. Taking into consideration the endogeneity of M&A decisions, we analyze the effects using the matching estimator approach, which is based on the estimated propensity score. We estimate the propensity score using a more recent econometric procedure: the Bootstrap Mixed Logit approach (BMXL, or Bootstrap Random Coefficients Logit Model), which captures observed and unobserved heterogeneity both within and between firms. The findings exhibit a significant improvement through BMXL in comparison to other models such as the simple Logit model and propensity score weighting. In general, the results provide evidence that acquisitions (both horizontal and vertical) tend to be value-reducing rather than value-neutral or value-enhancing. Additionally, contrary to previous studies, we find a considerable amount of acquisitions that are performed under managerial discipline motives.