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Common wave behavior for mergers and acquisitions in OECD countries? a unique analysis using new Markov switching panel model approach

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  • Shyh-Wei Chen

    (Department of Finance, Da-Yeh University)

  • Mei-Rong Lin

    (Department of Money and Banking, National Chengchi University)

  • Chung-Hua Shen

    (Department and Graduate Institute of Finance, National Taiwan University)

Abstract

This paper investigates whether or not there is co-waved merger and acquisition (M&A) activity in 26 OECD countries. We apply the Markov Switching model to panel data (MSP hereafter), an approach which has not previously been attempted. Two distinct regimes are recognized in emerge from M&A data: the wave merger regime and normal merger regime. Our MSP captures the co-wave pattern of the sample countries and has a much better fit than either the univariate Markov Switching model or the conventional linear panel model.

Suggested Citation

  • Shyh-Wei Chen & Mei-Rong Lin & Chung-Hua Shen, 2008. "Common wave behavior for mergers and acquisitions in OECD countries? a unique analysis using new Markov switching panel model approach," Economics Bulletin, AccessEcon, vol. 7(8), pages 1-12.
    • Handle: RePEc:ebl:ecbull:eb-08g30007
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    References listed on IDEAS

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    2. Aidi WAFA & Mohamed AYADI, 2010. "What Effect Exerts Sequencing of International Liberalization on Regional Financial Stability?," EcoMod2010 259600169, EcoMod.

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