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On the Patterns and Wealth Effects of Vertical Mergers

Author

Listed:
  • Joseph P. H. Fan

    (Chinese University of Hong Kong)

  • Vidhan K. Goyal

    (Hong Kong University of Science and Technology)

Abstract

We use industry commodity flows information to measure vertical relations in completed mergers from 1962 to 1996. Almost one-third of the mergers display vertical relatedness. Vertical merger activity is more intensive in the 1980s and 1990s and less so in the 1960s and the 1970s. Vertical mergers generate positive wealth effects that are significantly larger than those for diversifying mergers; the wealth effects in vertical mergers are comparable to those in pure horizontal mergers.

Suggested Citation

  • Joseph P. H. Fan & Vidhan K. Goyal, 2006. "On the Patterns and Wealth Effects of Vertical Mergers," The Journal of Business, University of Chicago Press, vol. 79(2), pages 877-902, March.
    • Handle: RePEc:ucp:jnlbus:v:79:y:2006:i:2:p:877-902
    DOI: 10.1086/499141
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