Journal of Economic Perspectives: Vol. 15 No. 2 (Spring 2001)


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New Evidence and Perspectives on Mergers

Article Citation

Andrade, Gregor, Mark Mitchell, and Erik Stafford. 2001. "New Evidence and Perspectives on Mergers." Journal of Economic Perspectives, 15(2): 103-120.

DOI: 10.1257/jep.15.2.103


As in previous decades, merger activity clusters by industry during the 1990s. One particular kind of industry shock, deregulation, becomes a dominant factor, accountings for nearly half of the merger activity since the late 1980s. In contrast to the 1980s, mergers in the 1990s are mostly stock swaps, and hostile takeovers virtually disappear. Over our 1973 to 1998 sample period, the announcement-period stock market response to mergers is positive for the combined merging parties, suggesting that mergers create value on behalf of shareholders. Consistent with that, we find evidence of improved operating performance following mergers, relative to industry peers.

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Andrade, Gregor (Harvard U)
Mitchell, Mark (Harvard U)
Stafford, Erik (Harvard U)

JEL Classifications

G34: Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance


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