Merger waves: Are buyers following the herd or responding to structural queues?

Ralph Mark Sonenshine

Article ID: 971
Vol 4, Issue 1, 2021

VIEWS - 1280 (Abstract) 349 (PDF)


While there has been a significant amount of research covering the causes of merger waves, few papers have rank ordered merger waves based on the causes nor sought to determine which rationale leads to higher bidder payouts.  This paper seeks to fill this gap by examining a cross section of large mergers across most industries occurring over a 17 year period.  I find that merger waves over this period are caused foremost by changing economic and regulatory conditions.  It is the behavioral rationale of mispricing, however, that more often leads to higher bidder payouts or merger premiums among acquirers in merger waves. 


mergers and acquisitions; merger premium; neoclassical; behavioral

Full Text:



1. Andrade G, Mitchell M, Stafford E. New evidence and perspectives on mergers? Journal of Economic Perspectives 2001; 15, 103-120.

2. Brealey, Richard A , Stewart C. Myers. Principles of corporate finance. 1st ed. New York, NY: McGraw-Hill Education1996.

3. Gugler K, Mueller D, Weichselbaumer M. The determinants of merger waves: An international perspective. International Journal of Industrial Organization 2012; 30(1): 1-15.

4. Harford J. What drives merger waves? Journal of Financial Economics 2005; 77,529-560.

5. Jovanovic Boyan, Peter Rousseau. The Q-theory of mergers. American Economic Review 2002; 92, 198–204.

6. Mitchell M, Mulherin M. The impact of industry shocks on takeover and restructuring activity. Journal of Financial Economics 1996; 41(2):193-229.

7. Rhodes-Kropf M, Viswanathan S. Market valuationa and merger waves. The Journal of Finance 2004; 59(6): 2685–2718.

8. Roll R. The hubris hypothesis of corporate takeovers. The Journal of Business 1986; 59(2): 197-216.

9. Shleifer A, Vishny R. Stock market driven acquisitions. Journal of Financial Economics 2003; 70, 295–311.

10. Sonenshine R, Reynolds K. Determinants of cross border merger premia. Review of World Economics 2014; 150(1): 173-189.

11. Ovtchinnikov A. Merger waves following industry deregulation. Journal of Corporate Finance 2013; 21, 41-76.

12. Verter G. Timing merger waves. Harvard University, Mimeo 2002.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Creative Commons License

This site is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.