Thursday, May 21, 2020

Competition Policy and the Profitability of Corporate Acquisitions

Gishan Dissanaike, Wolfgang Drobetz, and Paul P.Momtaz discuss Competition Policy and the Profitability of Corporate Acquisitions

ABSTRACT: Merger control exists to help safeguard effective competition. However, findings from a natural experiment suggest that regulatory merger control reduces the profitability of corporate acquisitions. Uncertainty about merger control decisions reduces takeover threats from foreign and very large acquirers, therefore facilitating agency-motivated deals. Valuation effects are more pronounced in countries with stronger law enforcement and in more concentrated industries. Our results suggest that competition policy may impede the efficiency of the M&A market.

https://lawprofessors.typepad.com/antitrustprof_blog/2020/05/competition-policy-and-the-profitability-of-corporate-acquisitions.html

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