The Politics of M&A Antitrust

Journal of Accounting Research, Volume 58, Issue 1, March 2020

Posted: 9 Mar 2020

See all articles by Mihir N. Mehta

Mihir N. Mehta

University of Michigan at Ann Arbor

Suraj Srinivasan

Harvard Business School

Wanli Zhao

Renmin University of China

Date Written: March 1, 2020

Abstract

Antitrust regulators play a critical role in protecting market competition. We examine whether the political process affects antitrust reviews of merger transactions. We find that acquirers and targets located in the political districts of powerful U.S. congressional members who serve on committees with antitrust regulatory oversight receive relatively favorable antitrust review outcomes. To establish causality, we use plausibly exogenous shocks to firm–politician links and a falsification test. Additional findings suggest congressional members’ incentives to influence antitrust reviews are affected by three channels: special interests, voter and constituent interests, and ideology. In aggregate, our findings suggest that the political process adversely interferes with the ability of antitrust regulators to provide independent recommendations about anticompetitive mergers.

Keywords: political economy; antitrust; FTC; DOJ; Senate Committee on the Judiciary; House Judiciary Committee; mergers and acquisitions

JEL Classification: D72; G34; G38; K21

Suggested Citation

Mehta, Mihir N. and Srinivasan, Suraj and Zhao, Wanli, The Politics of M&A Antitrust (March 1, 2020). Journal of Accounting Research, Volume 58, Issue 1, March 2020, Available at SSRN: https://ssrn.com/abstract=3538458

Mihir N. Mehta

University of Michigan at Ann Arbor ( email )

701 Tappan Ave
Ann Arbor, MI 48109
United States

HOME PAGE: http://www.mihirnmehta.com

Suraj Srinivasan (Contact Author)

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=10700

Wanli Zhao

Renmin University of China ( email )

59 Zhongguancun Street
Beijing, 100872
China

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