The economic impact of merger control
Title: The economic impact of merger control
Citation: International review of law and economics, 2015, Vol. 42, pp. 88-104
ISSN: 0144-8188; 1873-6394
We investigate the impact of legislative reforms in merger control legislation in nineteen industrial countries between 1987 and 2004. We find that strengthening merger control decreases the stock prices of non-financial firms, while increasing those of banks. Cross sectional regressions show that the discretion embedded in the supervisory control of bank mergers is a major determinant of the positive bank stock returns. One explanation is that merger control introduces “checks and balances” that mitigates the potential abuse and wasteful enforcement of supervisory control in the banking sector.
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