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A unified theory of forward‐ and backward‐looking M&As and divestitures
Author(s) -
Ma Qing,
Wang Susheng
Publication year - 2018
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12131
Subject(s) - divestment , economics , industrial organization , monetary economics , finance
In a unified theory of forward‐ and backward‐looking mergers and acquisitions (M&As) and divestitures, an M&A today may be a cause for a divestiture in the future; conversely a divestiture today may be a consequence of an M&A in the past. M&As and divestitures are not only two sides of the same coin, they are also causes and consequences of each other. In this paper, in a two‐period model, two firms consider integrating or separating in each period. We analyze forward‐ and backward‐looking M&As and divestitures, and compare them with static M&As and divestitures.