Private and Public Merger Waves

47 Pages Posted: 18 Jun 2010  

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business

Gordon M. Phillips

Tuck School of Business at Dartmouth; National Bureau of Economic Research (NBER)

Liu Yang

University of Maryland, R. H. Smith School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: May 27, 2010

Abstract

We examine the participation of public and private firms in merger waves and their outcomes. We show that public firms participate more in mergers and acquisitions than private firms and are more cyclical in their acquisitions. Public firms are also impacted more by macro factors including credit spreads and aggregate merger activities. Plants acquired on-the-wave realize more gain in productivity. We show that our results are not just driven by the fact that public firms have better access to capital. Using productivity data early in the firm's life, we find that better firms select to become public and that we can predict higher participation in productivity-increasing mergers and acquisitions ten and more years later after a firm's initial appearance. Our results suggest that a firm's potential can be identified early and that high potential firms become public in anticipation of accessing capital in the public markets when opportunities arise.

Keywords: Merger Waves, Private Firms, Initial Conditions, TFP

Suggested Citation

Maksimovic, Vojislav and Phillips, Gordon M. and Yang, Liu, Private and Public Merger Waves (May 27, 2010). Available at SSRN: https://ssrn.com/abstract=1625848 or http://dx.doi.org/10.2139/ssrn.1625848

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business ( email )

Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)

HOME PAGE: http://www.rhsmith.umd.edu/finance/vmax/

Gordon M. Phillips

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Liu A. Yang (Contact Author)

University of Maryland, R. H. Smith School of Business ( email )

4420 Van Munching Hall
R.H.Smith School of Business
College Park, MD 20742
United States
3014058794 (Phone)

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