Citation:
Malcolm Arnold and David Parker. UK Competition Policy and Shareholder Value: The Impact of Merger Inquiries. British Journal of Management, 2007, Vol. 18, pp. 27–43
Abstract:
Some previous studies have suggested that competition re´gimes can destroy shareholder
value. This study examines data on 50 mergers in the UK between 1989 and 2002. The
study confirms the finding from earlier studies of greater gains to shareholders in target
than bidding companies, but does not find evidence supporting overall loss of
shareholder value to target company shareholders when a merger is prohibited. It
finds evidence that when the regulatory re´gime is stable and well understood the capital
market behaves efficiently in response to new information. However, for a subgroup of
the mergers involving companies with a new regulatory re´gime, where the industry and
the stock market had little or no experience with respect to mergers, the capital market
operated less efficiently.