Competition and Merger Activity in the U.S. Telecommunications Industry

Abstract

In this article we examine the U.S. telecommunications industry during a period of rapid deregulation to determine the effects of a deregulatory shock on industry competition and merger activity. We show that merger activity exhibits a clear wave-like pattern, regardless of the listing status of the participants. Increased competition and IPO activity following deregulation increased cash-flow volatility and probability of exit while the introduction of new technology increased dispersion of economic efficiency across the industry. These changes resulted in a significant increase in merger activity. Competition also played an important role in shaping "who buys whom?" JEL Classification: G34, G38

Stock Mispricing Differentiate the Motives for Mergers and Acquisitions： Based on the Post-acquisition Market Evidence from China

“…Eckbo (1985) find that competitors enjoy positive abnormal returns in the acquisition announcement [4] ; Hayn (1989) find that depreciation related tax preferences is one of the motivations of M&As [5] ; Healy et al (1992) support the argument of operational coordination. They find that the acquirers have higher operating efficiency [6] ; Ghosh and Jain (2000) support the financial synergy argument by proving that the financial leverage increases significantly after a merger [7] ; Hoberg and Phillips (2010) [8] , Jan and Kai (2014) [9] and other studies find that the pursuit of market and technology synergy of products are both important driving factors for M&As; Weston and Chung (1990) [10] , Alexei (2013) [11] , Okoeguale and Loveland (2017) [12] confirm the argument that industry shock is the motivation of M&As.…”

Stock Mispricing Differentiate the Motives for Mergers and Acquisitions： Based on the Post-acquisition Market Evidence from China

“…Weston and Chung (1990) [10] , Alexei (2013) [11] , Okoeguale and Loveland (2017) [12] confirm the argument that industry shock is the motivation of M&As.…”