Business, Management and Accounting
4 years ago

Mergers Boost Corporate Performance and Cash Flow Returns, Study Finds.

Journal of Financial Economics
Does corporate performance improve after mergers?
Paul M. Healy, Krishna G. Palepu, Richard S. Ruback

Paper Summary

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The study looked at 50 big mergers in the U.S. from 1979 to 1984. After merging, companies improved how well they used their assets, making more money from them. This was especially true for companies with similar businesses. Mergers didn't lead to less spending on long-term investments like research and development. When companies made more money after merging, their stock prices went up, showing that investors expected good things from the mergers.