Kiel Working Papers, Kiel Institute for World Economics
No 1092:
Causes and Consequences of Merger Waves
Jörn Kleinert and Henning Klodt
Abstract: This paper presents some ideas about determinants of
merger waves and some evidence on their effect on profitability and
employment. A brief survey of previous merger waves and an analysis of the
recent one give support to the hypothesis that sectoral shocks are at the
root of merger waves. Deregulation and globalization are identified as the
shocks responsible for the latest wave. The impact of merger activities on
profitability and employment growth are studied by using the DOME database
which has been built up at the Kiel Institute of World Economics. On
average, performance of merging and non-merging firms do not differ
significantly. In smaller, more homogenous sub-samples, however,
substantial sectoral differences are found. The most important determinant
of the success of mergers is the size of the target unit.
Keywords: Mergers, Deregulation, Globalization, Event Studies; (follow links to similar papers)
JEL-Codes: G34; L22; F23; (follow links to similar papers)
28 pages, January 2002
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