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Target Profits and Managerial Discipline during the Conglomerate Merger Wave

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  • Matsusaka, John G

Abstract

This paper takes a close look at the extraordinarily high premerger profit rates of target companies during the conglomerate merger wave. Both publicly traded.and privately owned targets were significantly more profitable than other firms in their industries and size classes. This implies that managerial discipline was not a predominant takeover motive during the period. However, public targets were less profitable than private targets and the largest public targets earned only average profits. This suggests that managerial discipline may have been important for the few takeovers that involved large publicly traded targets. Copyright 1993 by Blackwell Publishing Ltd.

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  • Matsusaka, John G, 1993. "Target Profits and Managerial Discipline during the Conglomerate Merger Wave," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 179-189, June.
  • Handle: RePEc:bla:jindec:v:41:y:1993:i:2:p:179-89
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    Cited by:

    1. Klein, Peter G, 2001. "Were the Acquisitive Conglomerates Inefficient?," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 745-761, Winter.
    2. Peter Cappelli, 2000. "Examining the Incidence of Downsizing and Its Effect on Establishment Performance," NBER Working Papers 7742, National Bureau of Economic Research, Inc.
    3. Barber, Brad M. & Palmer, Donald & Wallace, James, 1995. "Determinants of conglomerate and predatory acquisitions: evidence from the 1960s," Journal of Corporate Finance, Elsevier, vol. 1(3-4), pages 283-318, April.
    4. Sang V. Nguyen & Michael Ollinger, 2006. "Mergers and Acquisitions and Productivity in the U.S. Meat Products Industries: Evidence from the Micro Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 606-616.
    5. Almeida, Rita, 2007. "The labor market effects of foreign owned firms," Journal of International Economics, Elsevier, vol. 72(1), pages 75-96, May.
    6. David R Merrell, 1999. "Productivity And Acquisitions In U.S. Coal Mining," Working Papers 99-17, Center for Economic Studies, U.S. Census Bureau.
    7. Sang V. Nguyen & Michael Ollinger, 2009. "Mergers and acquisitions, employment, wages, and plant closures in the U.S. meat product industries," Agribusiness, John Wiley & Sons, Ltd., vol. 25(1), pages 70-89.
    8. Ollinger, Michael & Nguyen, Sang V., 2003. "Empirical Evidence On The Motives For Mergers And Acquisitions In Eight Food Industries," 2003 Annual meeting, July 27-30, Montreal, Canada 22176, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Sang V Nguyen & Robert H Mcguckin & Arnold P Reznek, 1995. "The Impact Of Ownership Change On Employment, Wages, And Labor Productivity In U.S. Manufacturing 1977-87," Working Papers 95-8, Center for Economic Studies, U.S. Census Bureau.
    10. McGuckin, Robert H. & Nguyen, Sang V., 2001. "The impact of ownership changes: a view from labor markets," International Journal of Industrial Organization, Elsevier, pages 739-762.
    11. James Foreman-Peck & Tom Nicholls, 2013. "SME takeovers as a contributor to regional productivity gaps," Small Business Economics, Springer, vol. 41(2), pages 359-378, August.
    12. Sang V Nguyen, 1998. "The Manufacturing Plant Ownership Change Database: Its Construction And Usefulness," Working Papers 98-16, Center for Economic Studies, U.S. Census Bureau.

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