Drivers of Merger Waves: A Revisit

Soegiharto Soegiharto
(Submitted 2 December 2014)
(Published 12 January 2008)


This study reexamines whether the occurrence of merger waves can be explained by the neoclassical hypothesis or the behavioral hypothesis. Using merger data for the period spanning 1990 through 2001, this study directly compares the two theories and finds that, in general, merger waves occur at the time the capital liquidity is high, firms’ stocks are overvalued, and deregulatory events exist. These suggest that the existence of an economic motivation for transactions and the availability of lower transaction cost and/or overvalued stock to generate large volume of transactions may cause industry merger waves to cluster in time


industry shocks; market misvaluations; merger; merger waves

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DOI: 10.22146/gamaijb.5586


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