Journal of Financial Economics Vol. 49 No. 2 1998
The economics of parent-subsidiary mergers: an empirical analysis
Abstract
We examine parent-subsidiary mergers, transactions that do not entail arm's length bargaining or a change in control. These mergers are typically followed by considerable restructuring of subsidiaries. Minority and parent returns are not significantly different from returns at third party buyouts of parent-controlled subsidiaries, transactions that entail arm's length negotiations and a change in control. Buyer returns are negative, consistent with overbidding. We conclude that parent-subsidiary mergers facilitate corporate restructuring, foster the reallocation of resources toward higher valued uses, and increase value for both parent and subsidiary.
- DOI
- 10.1016/s0304-405x(98)00024-5
- Volume
- 49
- Issue
- 2
- Pages
- 255-279
- Sources
- bibtex:phds-export.bib openalex crossref