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Topic
Publication year
The Importance of Industry Links in Merger Waves
Resource type
Authors/contributors
- Ahern, Kenneth R. (Author)
- Harford, Jarrad (Author)
Title
The Importance of Industry Links in Merger Waves
Abstract
We represent the economy as a network of industries connected through customer and supplier trade flows. Using this network topology, we find that stronger product market connections lead to a greater incidence of cross-industry mergers. Furthermore, mergers propagate in waves across the network through customer-supplier links. Merger activity transmits to close industries quickly and to distant industries with a delay. Finally, economy-wide merger waves are driven by merger activity in industries that are centrally located in the product market network. Overall, we show that the network of real economic transactions helps to explain the formation and propagation of merger waves.
Publication
The Journal of Finance
Volume
69
Issue
2
Pages
527-576
Date
2014
Citation
Ahern, K. R., & Harford, J. (2014). The Importance of Industry Links in Merger Waves. The Journal of Finance, 69, 527–576.
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