IDEAS home Printed from https://ideas.repec.org/p/col/000122/010658.html
   My bibliography  Save this paper

Waves and determinants in the activity of Mergers and Acquisitions: The Case of Latin America

Author

Listed:
  • Lina M. Cortés

    ()

  • Diego A. Agudelo

    ()

  • Samuel Mongrut

    ()

Abstract

This paper contributes to the current literature of mergers and acquisitions (M&As) by studying the existence of waves and the determinants of M&A activity in the economies of Argentina, Brazil, Chile, Colombia, Mexico and Peru. From a sample of 2,490 M&As announcements reported by Thomson One for these countries, and applying the methodology proposed by Harford (2005), evidence of M&A waves is found for the periods 1993-2002 and 2003-2010 as reported for other regions in various international studies. After controlling for economic and business environment variables, as well as for profitability and book-to-market variables at industry level, we find evidence in favor of the neoclassical theory as a main explanation for M&As, but not for the misvaluation effect. For this purpose, a Prais-Winsten data model with panel corrected standard errors (PCSE) is used, and the results are confirmed through a negative binomial panel data estimation.

Suggested Citation

  • Lina M. Cortés & Diego A. Agudelo & Samuel Mongrut, 2012. "Waves and determinants in the activity of Mergers and Acquisitions: The Case of Latin America," DOCUMENTOS DE TRABAJO CIEF 010658, UNIVERSIDAD EAFIT.
  • Handle: RePEc:col:000122:010658
    as

    Download full text from publisher

    File URL: http://repository.eafit.edu.co/bitstream/10784/658/1/2012_22_Diego_Agudelo.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bhagat, Sanjai & Dong, Ming & Hirshleifer, David & Noah, Robert, 2005. "Do tender offers create value? New methods and evidence," Journal of Financial Economics, Elsevier, vol. 76(1), pages 3-60, April.
    2. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
    3. Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
    4. Rabin Hattari & Ramkishen S. Rajan, 2009. "Cross-border Mergers and Acquisitions (M&As) in Developing Asia: The Role of Financial Variables," Working Papers 362009, Hong Kong Institute for Monetary Research.
    5. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    6. Julián Benavides, 2005. "Concentración de la propiedad y desempeño contable: el caso latinoamericano," BORRADORES DE ECONOMÍA Y FINANZAS 002175, UNIVERSIDAD ICESI.
    7. Vojislav Maksimovic, 2001. "The Market for Corporate Assets: Who Engages in Mergers and Asset Sales and Are There Efficiency Gains?," Journal of Finance, American Finance Association, vol. 56(6), pages 2019-2065, December.
    8. Eckbo, B. Espen & Langohr, Herwig, 1989. "Information disclosure, method of payment, and takeover premiums : Public and private tender offers in France," Journal of Financial Economics, Elsevier, vol. 24(2), pages 363-403.
    9. Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003. "The effects of mergers: an international comparison," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 625-653, May.
    10. Pablo, Eduardo, 2009. "Determinants of cross-border M&As in Latin America," Journal of Business Research, Elsevier, vol. 62(9), pages 861-867, September.
    11. Hijzen, Alexander & Görg, Holger & Manchin, Miriam, 2008. "Cross-border mergers and acquisitions and the role of trade costs," European Economic Review, Elsevier, vol. 52(5), pages 849-866, July.
    12. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    13. Bülent Aybar & Aysun Ficici, 2009. "Cross-border acquisitions and firm value: An analysis of emerging-market multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(8), pages 1317-1338, October.
    14. Eckbo, B. Espen, 1983. "Horizontal mergers, collusion, and stockholder wealth," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 241-273, April.
    15. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    16. Rossi, Stefano & Volpin, Paolo F., 2004. "Cross-country determinants of mergers and acquisitions," Journal of Financial Economics, Elsevier, vol. 74(2), pages 277-304, November.
    17. Shleifer, Andrei & Vishny, Robert W., 2003. "Stock market driven acquisitions," Journal of Financial Economics, Elsevier, vol. 70(3), pages 295-311, December.
    18. Fama, Eugene F. & French, Kenneth R., 1997. "Industry costs of equity," Journal of Financial Economics, Elsevier, vol. 43(2), pages 153-193, February.
    19. A Cosh & P Guest, 2001. "The Long-Run Performance of Hostile Takeovers: UK Evidence," Working Papers wp215, Centre for Business Research, University of Cambridge.
    20. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
    21. Harford, Jarrad, 2005. "What drives merger waves?," Journal of Financial Economics, Elsevier, vol. 77(3), pages 529-560, September.
    22. Rhodes-Kropf, Matthew & Robinson, David T. & Viswanathan, S., 2005. "Valuation waves and merger activity: The empirical evidence," Journal of Financial Economics, Elsevier, vol. 77(3), pages 561-603, September.
    23. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, pages 323-329.
    24. Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, December.
    25. Alba, Joseph D. & Park, Donghyun & Wang, Peiming, 2009. "Corporate Governance and Merger and Acquisition Foreign Direct Investment: Firm-level Evidence from Japanese Foreign Direct Investment into the US," ADB Economics Working Paper Series 147, Asian Development Bank.
    26. Ralph L. Nelson, 1959. "Merger Movements in American Industry, 1895-1956," NBER Books, National Bureau of Economic Research, Inc, number nels59-1.
    27. Darcy Fuenzalida & Samuel Mongrut & Mauricio Nash & Juan Tapia, 2006. "Tender offers in South America: Are abnormal returns really high?," ESTUDIOS GERENCIALES, UNIVERSIDAD ICESI, August.
    28. Angwin, Duncan, 2001. "Mergers and acquisitions across European borders: National perspectives on preacquisition due diligence and the use of professional advisers," Journal of World Business, Elsevier, vol. 36(1), pages 32-57, April.
    29. Michael Gort, 1969. "An Economic Disturbance Theory of Mergers," The Quarterly Journal of Economics, Oxford University Press, vol. 83(4), pages 624-642.
    30. Matthew Rhodes-Kropf & S. Viswanathan, 2004. "Market Valuation and Merger Waves," Journal of Finance, American Finance Association, vol. 59(6), pages 2685-2718, December.
    31. Martynova, Marina & Renneboog, Luc, 2008. "A century of corporate takeovers: What have we learned and where do we stand?," Journal of Banking & Finance, Elsevier, vol. 32(10), pages 2148-2177, October.
    32. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
    33. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, pages 321-389.
    34. repec:hrv:faseco:30748164 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lina M. Cortés & Iván A. Durán & Sandra Gaitán-Riaño & Mateo Vasco, 2016. "Mergers and Acquisitions in Latin America: Industrial Productivity and Corporate Governance," DOCUMENTOS DE TRABAJO CIEF 014436, UNIVERSIDAD EAFIT.

    More about this item

    Keywords

    Mergers and Acquisitions; Latin American Economics; PCSE ; Counting Models;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:col:000122:010658. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Centro de Investigaciones Económicas y Financieras (CIEF)). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.