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 (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20220415-220320274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) | ||||
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ORCID: |
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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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