IDEAS home Printed from https://ideas.repec.org/p/csc/cerisp/199915.html
   My bibliography  Save this paper

Determinants And Effects Of Mergers And Acquisitions: An Analysis Based On The Notifications To Antitrust Authorities

Author

Abstract

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.

Suggested Citation

  • Luigi Benfratello, 1999. "Determinants And Effects Of Mergers And Acquisitions: An Analysis Based On The Notifications To Antitrust Authorities," CERIS Working Paper 199915, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
  • Handle: RePEc:csc:cerisp:199915
    as

    Download full text from publisher

    File URL: http://www.digibess.it/fedora/repository/object_download/openbess:TO094-00234/PDF/openbess_TO094-00234.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
    2. 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.
    3. K Amess, "undated". "Management Buyouts and Firm-Level Performance," SMF Discussion Paper Series 9702, University of Nottingham, School of Management & Finance.
    4. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110-110.
    5. Scott, John T., 1989. "Purposive diversification as a motive for merger," International Journal of Industrial Organization, Elsevier, vol. 7(1), pages 35-47, March.
    6. 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.
    7. Baldwin,John R. & Gorecki,Paul, 1998. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521633574.
    8. 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.
    9. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351-351.
    10. 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 825-844, July.
    11. 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, Specia), pages 643-684.
    12. 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.
    13. 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.
    14. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    15. 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) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    16. Dennis Mueller, 1996. "Antimerger policy in the United States: History and lessons," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(3), pages 229-253, October.
    17. Dennis C. Mueller, 1969. "A Theory of Conglomerate Mergers," The Quarterly Journal of Economics, Oxford University Press, vol. 83(4), pages 643-659.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

    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: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: (Anna Perin) or (Giancarlo Birello). General contact details of provider: http://edirc.repec.org/data/cerisit.html .

    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.