Mergers and Acquisitions under Common Ownership

Mergers and Acquisitions under Common Ownership

Miguel Anton

University of Navarra, IESE Business School

Florian Ederer

Yale School of Management; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Yale University - Cowles Foundation

Mireia Gine

IESE Business School, University of Navarra ; The University of Pennsylvania

Bruno Pellegrino

University of Maryland - Robert H. Smith School of Business

Date Written: January 11, 2023

Abstract

We provide new facts about the cross-section and evolution of mergers and acquisitions for U.S. public firms. Using a general equilibrium model with a hedonic demand system and data on institutional ownership, we document that mergers are increasingly concentrated among firm pairs with a high degree of product market interaction and a moderate-to-high degree of common ownership. We estimate how much mergers have raised aggregate corporate profits and reduced consumer surplus and quantify how the anti-competitive effects of mergers are affected by common ownership and shareholder value maximization motives.