Competition Policy and the Profitability of Corporate Acquisitions
63 Pages Posted: 2 Nov 2016 Last revised: 13 Sep 2019
Date Written: August 1, 2019
Merger control exists to help safeguard effective competition. However, findings from a natural experiment suggest that regulatory merger control reduces the profitability of corporate acquisitions. Uncertainty about merger control decisions reduces takeover threats from foreign and very large acquirers, therefore facilitating agency-motivated deals. Valuation effects are more pronounced in countries with stronger law enforcement and in more concentrated industries. Our results suggest that competition policy may impede the efficiency of the M&A market.
Keywords: Mergers and Acquisitions (M&a), Takeovers, Acquirer Returns, Acquisition Efficiency, Bidder Wealth Effects, Antitrust Law Enforcement, Competition Policy, Merger Control, Law and Finance
JEL Classification: G30, G34, G38, K21, L4
Suggested Citation: Suggested Citation