The long-term impact of mergers and the emergence of a merger wave in pre-World-War I Germany
The long-term impact of mergers and the emergence of a merger wave in pre-World-War I Germany
Using annual data on mergers for 35 leading German companies from 1870 to 1913, my study tries to explain the first merger wave that emerged 1898. My panel probit model that accounted for economies of scale, macroeconomic conditions, success of former mergers, and market structure revealed that previous mergers made subsequent mergers more likely. The propensity to merge was higher for larger companies that increased their market power. In the banking industry, managers imitated mergers, although these mergers were not successful, and hence followed the minimax regret principle. Rational information-based herding caused the serial dependency of mergers in other industries
merger, pre-world-war I, merger wave, minimax regret, herd behavior
667-688
Kling, Gerhard
feea1f9e-c49a-4d9c-b688-ec839cef9624
October 2006
Kling, Gerhard
feea1f9e-c49a-4d9c-b688-ec839cef9624
Kling, Gerhard
(2006)
The long-term impact of mergers and the emergence of a merger wave in pre-World-War I Germany.
Explorations in Economic History, 43 (4), .
(doi:10.1016/j.eeh.2005.07.001).
Abstract
Using annual data on mergers for 35 leading German companies from 1870 to 1913, my study tries to explain the first merger wave that emerged 1898. My panel probit model that accounted for economies of scale, macroeconomic conditions, success of former mergers, and market structure revealed that previous mergers made subsequent mergers more likely. The propensity to merge was higher for larger companies that increased their market power. In the banking industry, managers imitated mergers, although these mergers were not successful, and hence followed the minimax regret principle. Rational information-based herding caused the serial dependency of mergers in other industries
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Long_term.doc
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Published date: October 2006
Keywords:
merger, pre-world-war I, merger wave, minimax regret, herd behavior
Identifiers
Local EPrints ID: 165727
URI: http://eprints.soton.ac.uk/id/eprint/165727
ISSN: 0014-4983
PURE UUID: 5b32d613-dd6c-4434-8339-1e9ecdca1de3
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Date deposited: 20 Oct 2010 08:02
Last modified: 14 Mar 2024 02:11
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Author:
Gerhard Kling
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