Abstract
Mergers and acquisitions improve market efficiency by capturing synergies between firms. But takeovers also impose externalities (both positive and negative) on the remaining firms in the industry. This paper describes a new equilibrium concept designed to explain and predict takeovers in this setting. We experimentally compare the new equilibrium concept to that of competing concepts in situations without and with externalities. Moreover, we examine the predicted dynamics of takeovers and outcome implications of those dynamics. Our experimental results support the predictions of the new equilibrium concept and provide implications for further empirical tests.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 481-514 |
| Number of pages | 34 |
| Journal | Review of Finance |
| Volume | 8 |
| Issue number | 4 |
| DOIs | |
| State | Published - Dec 1 2004 |
| Externally published | Yes |