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The (Un)intended Consequences of M&A Regulatory Enforcements

Roll, Richard and de Bodt, Eric and Cousin, Jean-Gabriel and Officer, Micah (2022) The (Un)intended Consequences of M&A Regulatory Enforcements. Social Science Working Paper, 1462. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20220415-220320274

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Abstract

Economic and policy uncertainty affect merger and acquisition (M&A) activity. In this paper, we use Department of Justice (DOJ) and Federal Trade Commission (FTC) interventions in the M&A market to investigate whether uncertainty around regulatory enforcements also matters. Our results support this conjecture. Using the Hoberg and Phillips (2010) similarity scores to identify product market competitors, we confirm a clear and significant DOJ/FTC regulatory enforcements’ deterrence effect on future M&A transaction attempts, a result robust to many alternative specifications and confirmed in additional tests. This deterrence effect is (at least partly) driven by the length of the regulatory process, a factor that exacerbates enforcement uncertainty. Our results identify an (un)intended channel through which M&A regulation hampers efficient resources allocation.


Item Type:Report or Paper (Working Paper)
ORCID:
AuthorORCID
de Bodt, Eric0000-0002-1789-6507
Additional Information:Acknowledgments: We are grateful to Gregory Eaton, Feng Guo, and Tingting Liu for giving us access to their hand-gathered sample of valuation peers (from Eaton, Guo, Liu, and Officer, 2021).
Group:Social Science Working Papers
Subject Keywords:Regulatory uncertainty, Merger and acquisition, Deterrence
Series Name:Social Science Working Paper
Issue or Number:1462
DOI:10.7907/tjfh-3220
Record Number:CaltechAUTHORS:20220415-220320274
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20220415-220320274
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:114352
Collection:CaltechAUTHORS
Deposited By: Kapauhi Stibbard
Deposited On:15 Apr 2022 23:01
Last Modified:15 Apr 2022 23:01

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