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Mulherin, J. Harold
Netter, Jeffry M.
Stegemoller, Michael
Year of Publication: 
Series/Report no.: 
Claremont Colleges Working Papers in Economics 2001-21
We study the wealth effects of the mergers of privatized firms. Our sample entails 39 privatized firms that subsequently become targets of a takeover and 52 privatized firms that become bidders in mergers. Our results indicate that target firms experience a 12 percent increase in equity value at the announcement of a merger. The bidding firms experience a positive but insignificant change in equity value at merger announcement. The results indicate that mergers result in net wealth creation for privatized firms and are consistent with property rights/agency cost theory. The results also offer global, non-U.S. evidence that mergers create wealth.
Document Type: 
Working Paper

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