Premium
UK Competition Policy and Shareholder Value: The Impact of Merger Inquiries
Author(s) -
Arnold Malcolm,
Parker David
Publication year - 2007
Publication title -
british journal of management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.407
H-Index - 108
eISSN - 1467-8551
pISSN - 1045-3172
DOI - 10.1111/j.1467-8551.2006.00504.x
Subject(s) - shareholder , bidding , mergers and acquisitions , competition (biology) , business , shareholder value , stock market , stock (firearms) , capital market , value (mathematics) , capital (architecture) , monetary economics , market value , financial system , market economy , economics , accounting , corporate governance , finance , marketing , mechanical engineering , history , ecology , paleontology , archaeology , horse , machine learning , computer science , engineering , biology
Some previous studies have suggested that competition régimes can destroy shareholder value. This study examines data on 50 mergers in the UK between 1989 and 2002. The study confirms the finding from earlier studies of greater gains to shareholders in target than bidding companies, but does not find evidence supporting overall loss of shareholder value to target company shareholders when a merger is prohibited. It finds evidence that when the regulatory régime is stable and well understood the capital market behaves efficiently in response to new information. However, for a subgroup of the mergers involving companies with a new regulatory régime, where the industry and the stock market had little or no experience with respect to mergers, the capital market operated less efficiently.