The long-term impact of mergers and the emergence of a merger wave in pre-World-War I Germany

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

Using annual data on mergers for 35 leading German companies from 1870 to 1913, my study tries to explain the first merger wave that emerged 1898. My panel probit model that accounted for economies of scale, macroeconomic conditions, success of former mergers, and market structure revealed that previous mergers made subsequent mergers more likely. The propensity to merge was higher for larger companies that increased their market power. In the banking industry, managers imitated mergers, although these mergers were not successful, and hence followed the minimax regret principle. Rational information-based herding caused the serial dependency of mergers in other industries.
Original languageEnglish
Pages (from-to)667-688
Number of pages22
JournalExplorations in Economic History
Volume43
Issue number4
Early online date26 Sep 2005
DOIs
Publication statusPublished - Oct 2006

Fingerprint

World War I
Mergers
Merger waves
Germany
Waves
Industry
Large companies
Minimax regret
Serials
Macroeconomic conditions
Economies of scale
Probit model
Propensity
Herding
Banking industry
Market structure
Managers
Market power
Macroeconomics
Economy

Keywords

  • merger
  • Pre-World War I
  • merger wave
  • Minimax regret
  • Herd behavior

Cite this

The long-term impact of mergers and the emergence of a merger wave in pre-World-War I Germany. / Kling, Gerhard.

In: Explorations in Economic History, Vol. 43, No. 4, 10.2006, p. 667-688.

Research output: Contribution to journalArticle

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abstract = "Using annual data on mergers for 35 leading German companies from 1870 to 1913, my study tries to explain the first merger wave that emerged 1898. My panel probit model that accounted for economies of scale, macroeconomic conditions, success of former mergers, and market structure revealed that previous mergers made subsequent mergers more likely. The propensity to merge was higher for larger companies that increased their market power. In the banking industry, managers imitated mergers, although these mergers were not successful, and hence followed the minimax regret principle. Rational information-based herding caused the serial dependency of mergers in other industries.",
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