On the Patterns and Wealth Effects of Vertical Mergers

We use industry commodity flows information to measure vertical relations in completed mergers from 1962 to 1996. Almost one‐third of the mergers display vertical relatedness. Vertical merger activity is more intensive in the 1980s and 1990s and less so in the 1960s and the 1970s. Vertical mergers g...

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Bibliographic Details
Published in:The Journal of business (Chicago, Ill.) Ill.), 2006-03, Vol.79 (2), p.877-902
Main Authors: Fan, Joseph P. H., Goyal, Vidhan K.
Format: Article
Language:English
Subjects:
Acquisitions & mergers
American dollar
Business economics
Business structures
Business studies
Classification schemes
Codes
Commodities
Conglomerate mergers
Economic concentration
Economic impact
Empirical tests
Entertainment industries
Horizontal mergers
Industrial output
Mergers
Plastics industry
Regression analysis
Stock exchanges
Stock market delistings
Studies
Transportation industries
Vertical integration
Vertical mergers
Wealth effect
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Summary:We use industry commodity flows information to measure vertical relations in completed mergers from 1962 to 1996. Almost one‐third of the mergers display vertical relatedness. Vertical merger activity is more intensive in the 1980s and 1990s and less so in the 1960s and the 1970s. Vertical mergers generate positive wealth effects that are significantly larger than those for diversifying mergers; the wealth effects in vertical mergers are comparable to those in pure horizontal mergers.
ISSN:0021-9398
1537-5374
DOI:10.1086/499141