The Stock Market’s Valuation of R&D and Market Concentration in Horizontal Mergers

The Stock Market’s Valuation of R&D and Market Concentration in Horizontal Mergers It is well documented that acquirers often pay a large premium to acquire companies in related industries. There are many explanations as to the source of this premium. This study isolates two variables, R&D-intensity and market concentration, and assesses their influence individually and jointly on the deal premium. The results indicate that higher market concentration levels have a negative effect on the deal premium, while higher acquirer R&D-intensity has a positive influence, if the merger could result in a high market concentration level. Furthermore, deal premiums are greater in selected industries and in smaller deal sizes. Review of Industrial Organization Springer Journals

The Stock Market’s Valuation of R&D and Market Concentration in Horizontal Mergers

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Springer US
Copyright © 2010 by Springer Science+Business Media, LLC.
Economics; Industrial Organization; Microeconomics
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