The timing of mergers along the production chain, capital structure, and risk dynamics
Tarsalewska, Monika
Date: 15 April 2015
Article
Journal
Journal of Banking & Finance
Publisher
Elsevier
Publisher DOI
Abstract
I demonstrate that the timing of vertical mergers is generally dependent on industry characteristics. My predictions are consistent with empirically observed patterns of vertical mergers. I show that merger activity during economic upturns tends to be motivated by operating efficiencies, while merger activity during economic downturns ...
I demonstrate that the timing of vertical mergers is generally dependent on industry characteristics. My predictions are consistent with empirically observed patterns of vertical mergers. I show that merger activity during economic upturns tends to be motivated by operating efficiencies, while merger activity during economic downturns tends to occur as a means of keeping production chain operational. Mergers allow firms to capture synergies and improve efficiencies in order to survive economic contractions. The pricing framework implies that a vertical merger decision usually reduces risk during two different economic states.
Finance and Accounting
Faculty of Environment, Science and Economy
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