Private and Public Merger Waves

48 Pages Posted: 8 May 2012

See all articles by Vojislav Maksimovic

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business

Gordon M. Phillips

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

Liu Yang

University of Maryland

Multiple version iconThere are 2 versions of this paper

Date Written: April 23, 2012

Abstract

We examine the participation of public and private firms in merger waves and productivity outcomes. We show that public firms participate more than private firms as buyers and sellers of assets and their participation is more cyclical. Public firms are affected more by credit spreads and aggregate market valuation. Public firm transactions are also impacted positively by their stock market valuations and liquidity. Public firm acquisitions realize higher gains in productivity, particularly when their transactions occur on-the-wave and when their firms' stock is liquid and highly valued. We show that our results are not just driven by the fact that public firms have better access to capital. Using productivity data from early in the firm's life, we find that better private firms subsequently select to become public and that these initial conditions predict higher participation in asset purchases and sales five and more years later.

Keywords: Mergers and Acquisitions, Private Firms

JEL Classification: G34

Suggested Citation

Maksimovic, Vojislav and Phillips, Gordon M. and Yang, Liu A., Private and Public Merger Waves (April 23, 2012). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2053250

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://scholar.rhsmith.umd.edu/vmax/home

Gordon M. Phillips (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Liu A. Yang

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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