Determinants And Effects Of Mergers And Acquisitions: An Analysis Based On The Notifications To Antitrust Authorities
Using the Italian and European Union competition authorities databases over the 1991-1994 period, this paper analyses the ownership reallocation process in Italy, in terms of the characteristics of acquired firms and the effects of ownership changes. Our results show that acquired firms’ financial and profitability characteristics in the years before the acquisition are, accordingly with previous literature, worse than the control sample, and that their performance deteriorates as long as the change in ownership approaches. As far as the effects of acquisitions are concerned, the impact is negative, even if not significantly, in the short-run as well as four years after the acquisition. A subsequent stratification of the sample allows a separate analysis for three groups of particular operations: privatised firms are only slightly worse than control sample before the acquisition and the performance improvement occurs mainly before and only slightly after the acquisition; independent firms acquired by foreign multinationals do not differ from the control sample before the acquisition, while their performance clearly worsen after the change in ownership; firms acquired through leveraged and management buyouts perform better than the control sample before the acquisition. These results are consistent with most industrial organization literature, except for firms acquired by foreign multinationals.
|Length:||58 pages Keywords : Mergers and Acquisitions, privatization, leveraged and management buyout, foreign acquisitions|
|Date of creation:||Dec 1999|
|Date of revision:|
|Contact details of provider:|| Postal: Via Real Collegio, 30 10024 - Moncalieri TO|
Web page: http://www.ceris.cnr.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bertero, Elisabetta & Rondi, Laura, 2000. "Financial pressure and the behaviour of public enterprises under soft and hard budget constraints: evidence from Italian panel data," Journal of Public Economics, Elsevier, vol. 75(1), pages 73-98, January.
- Baldwin,John R. & Gorecki,Paul, 1998.
"The Dynamics of Industrial Competition,"
Cambridge University Press, number 9780521633574.
- James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
- Bianco, Magda & Casavola, Paola, 1999. "Italian corporate governance:: Effects on financial structure and firm performance," European Economic Review, Elsevier, vol. 43(4-6), pages 1057-1069, April.
- Dennis Mueller, 1996. "Antimerger policy in the United States: History and lessons," Empirica, Springer, vol. 23(3), pages 229-253, October.
- Dennis C. Mueller, 1969. "A Theory of Conglomerate Mergers," The Quarterly Journal of Economics, Oxford University Press, vol. 83(4), pages 643-659.
- Scott, John T., 1989. "Purposive diversification as a motive for merger," International Journal of Industrial Organization, Elsevier, vol. 7(1), pages 35-47, March.
- Yakov Amihud & Baruch Lev, 1981. "Risk Reduction as a Managerial Motive for Conglomerate Mergers," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 605-617, Autumn.
- Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
- Harris, Robert S & Ravenscraft, David, 1991. " The Role of Acquisitions in Foreign Direct Investment: Evidence from the U.S. Stock Market," Journal of Finance, American Finance Association, vol. 46(3), pages 825-44, July.
- Frank R. Lichtenberg & Donald Siegel, 1987. "Productivity and Changes in Ownership of Manufactoring Plants," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 643-684.
- Giovanni Fraquelli & Fabrizio Erbetta, 1999. "Privatization in Italy: an analysis of factors productivity and technical efficiency," CERIS Working Paper 199905, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
- William L. Megginson & Jeffry M. Netter, 1999. "From State to Market: A Survey of Empirical Studies on Privatization," Working Papers 1999.1, Fondazione Eni Enrico Mattei.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351.
- Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110.
- Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
- K Amess, . "Management Buyouts and Firm-Level Performance," SMF Discussion Paper Series 9702, University of Nottingham, School of Management & Finance.
When requesting a correction, please mention this item's handle: RePEc:csc:cerisp:199915. 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: (Enrico Viarisio)or (Anna Perin) or (Giancarlo Birello)
If references are entirely missing, you can add them using this form.