Abstract
Mergers and acquisitions (M&As) can conventionally be defined as the purchase of entire companies or their specific assets by another company. M&A transactions therefore imply that existing assets are combined in a new shape. In a frictionless world, asset recombination occurs whenever corporate assets are not used in the best possible way. The new asset combination should therefore be more productive than the old one. This means that corporate assets should be channeled toward those combinations that assure their highest productivity. Put differently, the combination of two or more assets should be more valuable than the sum of its parts. M&As have their theoretical foundation in three well-recognized theories: neoclassical theory, redistribution theory, and behavioral theory.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Ahern, K.R., Weston, J.F., 2007. M&As: The good, the bad, and the ugly, Journal of Applied Finance, Spring/Summer, pp. 5–20.
Alexandridis, G., Petmezas, D., Travlos, N.G., 2010. Gains from mergers and acquisitions around the world: New evidence, Financial Management 39 (4), pp. 1671–1695.
Alexandridis, G., Mavrovitis, C.F., Travlos, N.G., 2012. How have M&As changed? Evidence from the sixth merger wave, European Journal of Finance 18 (8), pp. 663–688.
Brakman, S., Garretsen, H., van Marrewijk, C., 2007. Cross-border mergers and acquisitions: The facts as a guide for international economics. In: Gregoriou, G.N., Renneboog, L. (Eds.), International mergers and acquisitions activity since 1990. Recent research and quantitative analysis, Burlington, MA: Academic Press, pp. 23–49.
Brouthers, K.D., 2002. Institutional, cultural and transaction cost influences on entry mode choice and performance, Journal of International Business Studies 33 (2), pp. 203–221.
Campa, J.M., Kedia, S., 2002. Explaining the diversification discount, The Journal of Finance 57 (4), pp. 1731–1762.
Dinc, I.S., Erel, I., 2013. Economic nationalism in mergers and acquisitions, The Journal of Finance 68 (6), pp. 2471–2514.
Gaughan, P.A., 2007. Mergers, acquisitions, and corporate restructurings, Fourth Edition, Hoboken, NJ: John Wiley & Sons.
Gort, M., 1969. An economic disturbance theory of mergers, Quarterly Journal of Economics 83 (4), pp. 624–642.
Hennart, J.E, 1991. The transaction costs theory of joint ventures: An empirical study of Japanese subsidiaries in the United States, Management Science 37 (4), pp. 483–497.
Hennart, J.F., Reddy, S., 1997. The choice between mergers/acquisitions and joint ventures: The case of Japanese investors in the United States, Strategic Management Journal 18 (1), pp. 1–12.
Holmstrom, B., Kaplan, S.N., 2001. Corporate governance and merger activity in the United States: Making sense of the 1980s and 1990s, Journal of Economic Perspectives 15 (2), pp. 121–144.
Höpner, M., Jackson, G., 2006. Revisiting the Mannesmann takeover: How markets for corporate control emerge, European Management Review 3, pp. 142–155.
Jensen, M.C., 1989. Eclipse of the public corporation, Harvard Business Review 67, pp. 61–74.
Makino, S., Neupert, K.E., 2000. National culture, transaction costs, and the choice between joint venture and wholly owned subsidiary, Journal of International Business Studies 31 (4), pp. 705–713.
Mitchell, M.L., Mulherin, J.H., 1996. The impact of industry shocks on takeover and restructuring activity, Journal of Financial Economics 41 (2), pp. 193–229.
Moeller, S.B., Schlingemann, F.P., Stulz, R.M., 2004. Firm size and the gains from acquisitions, Journal of Financial Economics 73 (2), pp. 201–228.
Moeller, S.B., Schlingemann, F.P., Stulz, R.M., 2005. Wealth destruction on a massive scale? A study of acquiring-firm returns in the recent merger wave, The Journal of Finance 60 (2), pp. 757–782.
North, D.C., 1990. Institutions, institutional change and economic performance, Cambridge: Cambridge University Press.
Starks, L.T, Wei, K.D., 2013. Cross-border mergers and differences in corporate governance, International Review of Finance 13 (3), pp. 265–297.
Sweeney, B.J., 2010. The internationalization of competition rules, Abingdon: Routledge.
Villalonga, B., 2004a. Diversification discount or premium? New evidence from the business information tracking series, The Journal of Finance 59 (2), pp. 479–506.
Villalonga, B., 2004b. Does diversification cause the “diversification discount”?, Financial Management 33 (2), pp. 5–27.
Wang, C., Xie, F., 2009. Corporate governance transfer and synergistic gains from mergers and acquisitions, Review of Financial Studies 22 (2), pp. 829–858.
Weston, J.F., Mitchell, M.L., Mulherin, J.H., 2004. Takeovers, restructuring, and corporate governance, Fourth Edition, Upper Saddle River, New Jersey: Pearson-Prentice Hall.
Whish, R., Bailey, D., 2012. Competition law, Seventh Edition, Oxford: Oxford University Press.
Copyright information
© 2014 Ottorino Morresi and Alberto Pezzi
About this chapter
Cite this chapter
Morresi, O., Pezzi, A. (2014). The M&A Phenomenon. In: Cross-border Mergers and Acquisitions. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137357625_1
Download citation
DOI: https://doi.org/10.1057/9781137357625_1
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-349-47174-4
Online ISBN: 978-1-137-35762-5
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)