Mergers, takeovers, and economic efficiency

Abstract

This survey contrasts the favorable appraisal of mergers derived from ex ante event studies to the increasingly negative findings based on ex post evaluations. The ex ante literature recognizes managerial behavior in target firms as an inefficient deterrent to mergers, but managerial behavior by bidders at least as clearly promotes excessive mergers. Accordingly, positive ex ante valuations of selloffs and spinoffs are unsurprising.