Competitive Strategy in Mergers and Acquisitions

53 Pages Posted: 15 Mar 2021 Last revised: 24 May 2022

Date Written: May 18, 2021

Abstract

This paper uses mergers and acquisitions (M&A) and textual analysis of firms' financial filings to show that competitive strategy constitutes an important determinant of firms' investment decisions. The analysis reveals that becoming an acquirer or a target depends on the strategy. Moreover, M&A deals are more likely between companies implementing the same strategy. Those deals yield higher combined announcement returns, asset and sales growth. The same strategy effect is stronger in a highly competitive environment and within an industry, suggesting that acquirer and target strategic misalignment constraints the optimal response to investment opportunities and market threats.

Keywords: mergers and acquisitions, strategy, synergies, product life-cycle, competition, textual analysis

JEL Classification: L21, G34, M21

Suggested Citation

Oreski, Tina, Competitive Strategy in Mergers and Acquisitions (May 18, 2021). Swiss Finance Institute Research Paper No. 21-29, Available at SSRN: https://ssrn.com/abstract=3803420 or http://dx.doi.org/10.2139/ssrn.3803420

Tina Oreski (Contact Author)

Swiss Finance Institute ( email )

USI Lugano
Via Giuseppe Buffi 13
Lugano, 6900
Switzerland

HOME PAGE: http://sites.google.com/view/tinaoreski

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