Merger activity is intense during economic booms and subdued during recessions. This paper provides a non-financial explanation for this observable pattern. We construct a model in which the target—by setting the takeover price—screens the acquirer on his (expected) ability to realize synergy gains when merging. In an economic boom, it is less profitable to sort out relatively “bad fit” acquire...

Why should a project about an organizational merger be interesting? What do the Petit Price and the fox teach us about the mergers? Antoine de Saint-Exupéry tells us a story about to become friends. Knowing the Petit Prince the fox breaks its life style; it learns a new verbal and emotional language and consequently re organizes tis life In this paper, I argue that reading a merger event as a b...

Under what circumstances should a competition authority allow a merger that creates a monopoly? As competition policy is predicated on the need to protect consumers from market power, the presumption might be that such a merger should never be allowed. However, there are circumstances in which a merger to monopoly can be the best available option. The European Commission’s recent clearance (sub...

This study examines the efficiency of 12 Taiwanese laptop manufacturers in 2002. This work demonstrates the feasibility of adopting Data Envelopment Analysis (DEA) to identify individual manufacturing firms that are less efficient than other ones. Efficiency is measured in terms of output variables relative to input variables. For those efficient laptop manufacturers lacking of productivity, th...

This article assesses the unilateral effects on prices of a merger in the Portuguese mobile telephony market. We use aggregate quarterly data from 1999 to 2005 and a nested logit model to estimate the price elasticities of demand and the marginal costs of subscription of mobile telephony. Given these estimates, we simulate the effects of the merger. We find that the available mobile telephony s...

We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyze under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective...

This paper examines the earnings management behavior of Japanese merger acquirers on the Tokyo Stock Exchange. Most Japanese mergers are transacted via stock swaps, when acquirers have incentive to manage pre-merger earnings to reduce the cost of acquisition. Consistent with this incentive, Japanese acquirers have significantly positive long-term abnormal accruals in the year prior to the merge...