Antitrust merger review costs and acquirer lobbying

Jana P. Fidrmuc, Peter Roosenboom, Eden Quxian Zhang

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

Documenting the US antitrust review process for M&As in rich detail, we unveil that regulatory costs and risks are significant and that mitigating these risks via lobbying by acquirers may benefit shareholders. Our results show that an adverse antitrust review outcome leads to a decline of 2.8% in acquirer firm value. Further, we show that lobbying before deal announcements is associated with more favorable review outcomes. Finally, higher pre-announcement lobbying is valued by shareholders, especially in horizontal deals and deals with a larger expected change in market concentration, which have higher antitrust concerns. However, this positive value effect of lobbying applies only in firms with strong corporate governance. Our results highlight the role of political connections and lobbying for corporate investments when facing regulatory costs and risks.

Original languageEnglish
Pages (from-to)72-97
Number of pages26
JournalJournal of Corporate Finance
Volume51
DOIs
Publication statusPublished - 1 Aug 2018

Keywords

  • Antitrust
  • Corporate lobbying
  • Mergers and acquisitions

Cite this

Fidrmuc, Jana P. ; Roosenboom, Peter ; Zhang, Eden Quxian. / Antitrust merger review costs and acquirer lobbying. In: Journal of Corporate Finance. 2018 ; Vol. 51. pp. 72-97.
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Antitrust merger review costs and acquirer lobbying. / Fidrmuc, Jana P.; Roosenboom, Peter; Zhang, Eden Quxian.

In: Journal of Corporate Finance, Vol. 51, 01.08.2018, p. 72-97.

Research output: Contribution to journalArticleResearchpeer-review

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