Journal of Banking & Finance Vol. 57 2015
The timing of mergers along the production chain, capital structure, and risk dynamics
open access
Abstract
I demonstrate that the timing of vertical mergers is generally dependent on industry characteristics. My predictions are consistent with empirically observed patterns of vertical mergers. I show that merger activity during economic upturns tends to be motivated by operating efficiencies, while merger activity during economic downturns tends to occur as a means of keeping production chain operational. Mergers allow firms to capture synergies and improve efficiencies in order to survive economic contractions. The pricing framework implies that a vertical merger decision usually reduces risk during two different economic states.
- DOI
- 10.1016/j.jbankfin.2015.03.014
- Volume
- 57
- Pages
- 51-64
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib