Efficient horizontal mergers

Article Abstract:

The Debreu-Farrell-Fare (DFF) measure was used to evaluate the efficiency of mergers in the context of cost efficiency. By analyzing the concentration curve dominance relation of merged entities operating under a homogenized industry, it was revealed that the total output generated by subgroups are distinct. It was shown that if the concentration curve of one group is dominated by the other, merger efficiency is manifested more by the latter subgroup of firms. Results further reflected significant differences in the cost function of firms involved in a merger.

Mergers & Acquisitions, Management, Business enterprises

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An analysis of value destruction and recovery in the alliance and proposed merger of Volvo and Renault

Article Abstract:

Reasons why the proposed merger between Volvo and Renault in 1993 are studied. The research seeks to clarify three issues which may be of interest to financial economists. These are the profitability of mergers, the value of institutional investors and importance of remedies to bad corporate governance. Results show that arrogance, managerialism and escalation of committment led to the failure of the merger. The decision not to push through with the merger caused Volvo shareholders to lose $1.1 billion in sharevalue.

Motor vehicles and car bodies, Automobile Manufacturing, Foreign-Make Autos, Mergers, acquisitions and divestments, Automobile industry, Regie Nationale des Usines Renault, AB Volvo, Foreign cars

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Partnerships, lemons, and efficient trade

Article Abstract:

The possibility of efficient trade with informational interdependent valuations and with a dispersed ownership are analyzed. The effects of adverse selection on incentive payments and budget constraints play the main role where variations in the degree of interdependence directly influences the incentive payments and ultimately leads to a tightening or relaxation of the budget constraint, thus affecting the ability to achieve efficient trade.

United States, Analysis, Efficient market theory, Value (Economics)

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