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- Title
The influence of industry concentration on merger motives-empirical evidence from machinery industry mergers.
- Authors
Geiger, Florian; Schiereck, Dirk
- Abstract
By linking industrial organization theory and capital market research, we provide empirical evidence that merger motives of firms are influenced by underlying industry concentration. Analyzing wealth effects on target, acquirer and rival firms in the machinery industry, we observe significant different capital market reactions among merger announcements in dependence of underlying industry concentration. suggesting that different takeover motives prevail in fragmented and concentrated industries. In contrast to previous studies, we find besides efficiency motives evidence for monopolistic collusion motives in fragmented industries. Mergers in concentrated industries are primarily motivated to achieve productive efficiency gains. The absence of collusion motives may be an indication for a successful enforcement of antitrust legislation. Our results suggest that the magnitude of the influence of industry concentration in empirical merger motive research may have been previously under-estimated leading to a potential distortion of results.
- Subjects
MACHINERY industry; INDUSTRIAL organization (Economic theory); FINANCIAL market reaction; WEALTH effect (Economics); MONOPOLIES; INDUSTRIAL productivity; EMPIRICAL research; MERGERS &; acquisitions
- Publication
Journal of Economics & Finance, 2014, Vol 38, Issue 1, p27
- ISSN
1055-0925
- Publication type
Article
- DOI
10.1007/s12197-011-9202-y