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An Anatomy of Industry Merger Waves

48 Pages Posted: 20 Jun 2015 Last revised: 14 Apr 2016

Daniele Bianchi

University of Warwick, Warwick Business School

Carlo Chiarella


Date Written: March 21, 2016


We propose a novel Markov regime-switching Poisson regression model with time-varying transition distributions to test existing theories on determinants of wave-like patterns in same-industry merger and acquisitions (M&As). We show that the dynamics and persistence of merger waves change substantially in the cross section of deals flow. Valuation ratios significantly drive transitions towards periods of abnormally high merger activity for most industries. Except few nuances, the empirical analysis demonstrates that while industry-specific economic shocks do not sensibly determine waves in market transactions, deteriorating aggregate economic conditions are expected to be associated with declining M&A activity across industries.

Keywords: M&A, Poisson Regressions, Markov Regime-Switching, Time-Varying Probabilities, Discrete-Choice Models, MCMC

JEL Classification: G34, C11, C22, C24, C58

Suggested Citation

Bianchi, Daniele and Chiarella, Carlo, An Anatomy of Industry Merger Waves (March 21, 2016). Available at SSRN: or

Daniele Bianchi (Contact Author)

University of Warwick, Warwick Business School ( email )

Gibbet Hill Rd
Coventry, CV4 7AL
Great Britain


Carlo Chiarella

CUNEF ( email )

C/ Leonardo Prieto Castro, 2
Ciudad Universitaria
Madrid, Madrid 28040

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