Who Gets the Wealth in Mergers and Acquisitions?
The value of merger and acquisition activities in 2001 exceeded $700 billion. The year 2000 witnessed $1.28 trillion worth of these deals. The burning question of how bondholders do in mergers now has a body of documented evidence. There were a number of studies in the 60s, 70s, and 80s, but none had conclusive, reliable evidence due to poor data, small sample size or simply being out-of-date. Head of Finance David Mauer, Assistant Professor Tao-Hsien Dolly King, and University of Iowas Matthew Billett have documented their findings in Bondholder Wealth Effects in Mergers and Acquisitions: New Evidence from the 1980s and 1990s published in the February issue of the Journal of Finance. A Brief Background We were sitting in my office one Friday, discussing how we have this wonderful new database, the fixed income database, and nobody seems to be using it to answer the obvious, narrated Mauer. Researchers were going all over the map with other issues. We figured we had better check all th
