Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93763
Authors: 
Clougherty, Joseph
Duso, Tomaso
Year of Publication: 
2008
Series/Report no.: 
SFB/TR 15 Discussion Paper 239
Abstract: 
It is commonly perceived that firms do not want to be outsiders to a merger between competitor firms. We instead argue that it is beneficial to be a non-merging rival firm to a large horizontal merger. Using a sample of mergers with expert-identification of relevant rivals and the event-study methodology, we find rivals generally experience positive abnormal returns at the merger announcement date. Further, we find that the stock reaction of rivals to merger events is not sensitive to merger waves; hence, 'future acquisition probability' does not drive the positive abnormal returns of rivals. We then build a conceptual framework that encompasses the impact of merger events on both merging and rival firms in order to provide a schematic to elicit more information on merger type.
Subjects: 
rivals
mergers
acquisitions
event-study
JEL: 
G14
G34
L22
M20
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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