Sources of Gains in Horizontal Mergers: Evidence from Customer, Supplier, and Rival Firms

52 Pages Posted: 30 May 2003 Last revised: 26 Jun 2015

See all articles by C. Edward Fee

C. Edward Fee

Tulane University - A.B. Freeman School of Business

Shawn Thomas

University of Pittsburgh - Katz Graduate School of Business

Date Written: September 12, 2003

Abstract

We investigate the upstream and downstream product-market effects of a large sample of horizontal mergers and acquisitions from 1980-1997. We construct a dataset that identifies the corporate customers, suppliers, and rivals of the firms initiating horizontal mergers and use this dataset to examine announcement-related stock market revaluations and post-merger changes in operating performance. We find little evidence consistent with increased monopolistic collusion. However, we do find evidence consistent with improved productive efficiency and buying power as sources of gains to horizontal mergers. The nature of the buying power gains, i.e., rents from monopsonistic collusion or improved purchasing efficiency, is also investigated.

Keywords: Mergers, Acquisitions, Collusion, Buying Power

JEL Classification: G34, D43, L41

Suggested Citation

Fee, C. Edward and Thomas, Shawn, Sources of Gains in Horizontal Mergers: Evidence from Customer, Supplier, and Rival Firms (September 12, 2003). Journal of Financial Economics (JFE), Vol. 74, 2004, Available at SSRN: https://ssrn.com/abstract=384900 or http://dx.doi.org/10.2139/ssrn.384900

C. Edward Fee (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Shawn Thomas

University of Pittsburgh - Katz Graduate School of Business ( email )

246 Mervis Hall
Pittsburgh, PA 15260
United States
412-648-1648 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~shthomas/index.htm

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1,354
Abstract Views
4,375
rank
15,459
PlumX Metrics