Merger waves : a model of endogenous mergers

By Larry D. Qiu, Wen Zhou. 2007

117 citations recorded by the source corpus.

We develop a model of endogenous mergers to study their dynamic process. Firms choose whether, when, and with whom to merge. Two necessary conditions are identified for mergers to occur: firm heterogeneity and negative demand shocks. We show that mergers are strategic complements and therefore tend to occur in waves. Moreover, some mergers occur for strategic reasons in order to precipitate further mergers.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d90f8abdfd7766aca403360ceb77d23732c3e8e3