Market Value, Market Share, and Mergers: Evidence from a Panel of U.S. Firms

Abstract

Improving shareholder value has often been cited as a merger determinant. Since mergers create larger firms and less competition, they may increase shareholder value through higher market share and stock-market value. We investigate merger impacts on firms' stock-market value and market share. We construct panel data from four different data sources on public merging and non-merging U.S. manufacturing firms for 1980-2003. Instrumental variables and factors such as R&D, patents, and citations control for endogeneity. We find that mergers are positively correlated with stock- market value and market share.

Keywords: Merger, Market Value, Market Share, R&D, Patent

JEL Classification: L10, L22, L40, O34