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Antitrust merger review costs and acquirer lobbying

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Fidrmuc, Jana P., Roosenboom, Peter and Zhang, Eden Quxian (2018) Antitrust merger review costs and acquirer lobbying. Journal of Corporate Finance, 51 . pp. 72-97. doi:10.1016/j.jcorpfin.2018.05.001

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Official URL: http://dx.doi.org/10.1016/j.jcorpfin.2018.05.001

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Abstract

Documenting the US antitrust review process for M&As in rich detail, we unveil that regulatory costs and risks are significant and that mitigating these risks via lobbying by acquirers may benefit shareholders. Our results show that an adverse antitrust review outcome leads to a decline of 2.8 percent in acquirer firm value. Further, we show that lobbying before deal announcements is associated with more favorable review outcomes. Finally, higher pre-announcement lobbying is valued by shareholders, especially in horizontal deals and deals with a larger expected change in market concentration, which have higher antitrust concerns. However, this positive value effect of lobbying applies only in firms with strong corporate governance. Our results highlight the role of political connections and lobbying for corporate investments when facing regulatory costs and risks.

Item Type: Journal Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
Divisions: Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH): Consolidation and merger of corporations -- United States, Antitrust law -- United States, Lobbying -- United States, Stockholders -- United States
Journal or Publication Title: Journal of Corporate Finance
Publisher: Elsevier Science BV
ISSN: 1872-6313
Official Date: August 2018
Dates:
DateEvent
August 2018Published
20 May 2018Available
8 May 2018Accepted
Volume: 51
Page Range: pp. 72-97
DOI: 10.1016/j.jcorpfin.2018.05.001
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Restricted or Subscription Access

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