Merger Performance and Antitrust Review: A Retrospective Analysis

Many empirical studies have shown negative abnormal returns to occur shortly after a once promising merger is consummated. There are few consistent explanations for the poor performance of so many mergers. This article considers mergers of concern to antitrust authorities to examine how structural factors, including market concentration and R&D intensity, as well as valuation metrics, such as merger premiums and merger waves, affect abnormal returns. Our results suggest that acquirer R&D intensity, market concentration of the deal premium, and deal size have a negative impact, whereas the target's intangible asset intensity and the presence of a merger wave positively influence merger performance.