The Determinants of Merger Waves

  title={The Determinants of Merger Waves},
  author={Klaus Gugler and Dennis C. Mueller and Burçin B. Yurtoğlu},
One of the most conspicuous features of mergers is that they come in waves, and that these waves are correlated with increases in share prices and price/earnings ratios. We test four hypotheses that have been advanced to explain merger waves: the industry shocks, q-, overvaluation and managerial discretion hypotheses. The first two are neoclassical in that they assume that managers maximize profits, mergers create wealth, and the capital market is efficient. The last two, behavioral hypotheses… CONTINUE READING

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