Risk, Returns to Scale and Monopoly Power in Horizontal Mergers: Theory and Evidence

The purpose of this research is to provide a better understanding of the risk and return changes surrounding horizontal mergers. A multi-period model of the firm incorporating monopoly power and returns to scale is used to relate microeconomic variables to capital market variables. A new measure, combining the theoretical factors, is derived from simple accounting and financial management ratios. The empirical results indicate that changes in the new measure can be used to explain changes in the capital market variables. In particular, shareholders of firms which had increases in the new measure of market power benefited from positive abnormal performance after the merger whereas shareholders of firms which had decreases in the new measure had no abnormal performance after the merger.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Finance

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2014

Author dc:creator

• Fellows, Paul Gordon

• Economics, Finance

Identifier

(UMI)AAI8521762

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/71518