The Effects of Mergers: An International Comparison

Klaus Gugler, Dennis Mueller, B. Burcin Yurtoglu, Christine Zulehner

Publication: Scientific journalJournal articlepeer-review


This paper analyzes the effects of mergers around the world over the past 15 years. We utilize a large panel of data on mergers to test several hypotheses about mergers. The effects of the mergers are examined by comparing the performance of the merging firms with control groups of nonmerging firms. The comparisons are made on profitability and sales.
The results show that mergers on average do result in significant increases in profits, but reduce the sales of the merging firms. Interestingly, these post merger patterns look similar across countries. We also did not find dramatic differences between mergers in the manufacturing and the service sectors, and between domestic and cross-border mergers. Conglomerate mergers decrease sales more than horizontal mergers. By separating mergers into those that increase profits and those that reduce them and by then examining the patterns of sales changes following the mergers, we determine the effects of mergers on
efficiency and market power. Our results suggest that those mergers that decrease profits and efficiency account for a large proportion. However, we can also identify mergers that increase profits by either increasing market power or by increasing efficiency. The first
conclusion seems to be a more likely explanation for large companies, whereas the latter is likely to be true for small firms.
Original languageEnglish
Pages (from-to)625 - 653
JournalInternational Journal of Industrial Organization
Issue number5
Publication statusPublished - 1 Aug 2003

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502013 Industrial economics

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