Mergers and Acquisitions under Common Ownership

Abstract

We provide new facts about the cross-section and evolution of mergers and acquisitions for U.S. public firms. Using a general equilibrium model with a hedonic demand system and data on institutional ownership, we document that mergers are increasingly concentrated among firm pairs with a high degree of product market interaction and a moderate-to-high degree of common ownership. We estimate how much mergers have raised aggregate corporate profits and reduced consumer surplus and quantify how the anti-competitive effects of mergers are affected by common ownership and shareholder value maximization motives.

Keywords: common ownership, concentration, competition, mergers, antitrust, networks

JEL Classification: D43, D85, E23, L16, G23, G34