WZB Discussion Paper SP II No. 2010-13
49 Pages Posted: 30 Oct 2010
Date Written: September 28, 2010
The strategic management literature has found it difficult to differentiate between collusive and efficiency-based synergies in horizontal merger activity. We propose a schematic to classify mergers that yields more information on merger types and merger effects, and that can, moreover, distinguish between mergers characterized largely by collusion-based synergies and mergers characterized largely by effi-ciency-based synergies. Crucial to the proposed measurement procedure is that it encompasses the impact of merger events not only on merging firms – as is custom – but also on non-merging competitor firms (the rivals). Employing the event-study methodology with stock-market data on samples of large horizontal mergers drawn from the US and UK (an Anglo-Saxon sub-sample) and from the European continent, we demonstrate how the proposed schematic can better clarify the nature of merger activity.
Keywords: acquisitions, event-study, mergers, research methods, rivals, synergy
Suggested Citation: Suggested Citation
Duso, Tomaso and Clougherty , Joseph A., Using Rival Effects to Identify Synergies and Improve Merger Typologies (September 28, 2010). WZB Discussion Paper SP II No. 2010-13. Available at SSRN: https://ssrn.com/abstract=1699124 or http://dx.doi.org/10.2139/ssrn.1699124