The impact of financial and economic conditions on aggregate merger activity

John A. Polonchek, Marie Sushka

Research output: Contribution to journalArticle

10 Scopus citations

Abstract

A model of aggregate merger activity is developed by integrating the literature on aggregate investment in fixed capital into a microfinance framework. Mergers are viewed as the result of firms capital budgeting processes, and two major categories of explanatory variables emerge: (1) cost of capital and related financial effects, and (2) output effects. Regressions, estimated to explain the number of large mining and manufacturing mergers over the sample period 1956–1978, provide evidence consistent with this view. In addition, the model explains the high level of merger activity during the conglomerate boom of 1967–9.

Original languageEnglish (US)
Pages (from-to)113-119
Number of pages7
JournalManagerial and Decision Economics
Volume8
Issue number2
DOIs
StatePublished - Jun 1987

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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