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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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WRAP-antitrust-merger-costs-acquirer-lobbying-Fidrmuc-2018.pdf - Accepted Version - Requires a PDF viewer. Download (2661Kb) | Preview |
Official URL: http://dx.doi.org/10.1016/j.jcorpfin.2018.05.001
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 | ||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce |
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| 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: |
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| 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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