Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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

| Permalink

Comments

Post a comment