Efficient horizontal mergers: The effects of internal capital reallocation and organizational form

Merger performance under uncertain efficiency gains

“…al. (2008) and Mialon (2008), who investigate the effects of internal reorganization by a merged entity and Spector (2003), who consider the effects of mergers when allowing for entry into the industry. expected efficiency gains in gauging the welfare effects of mergers, as in common antitrust practice in many countries.…”

Multidivisional Strategy and Investment Returns

“…According to the input logic, multidivisional firms share resources across their divisions in order to instill best practices, ideas, or opportunities that enhance their value‐creation potential (Dessein et al., ). According to the market logic, divisionalization leads to better results through strengthening the competitive position of a firm with respect to its rivals (Veendorp, ; Mialon, ). These mechanisms have not received much attention in empirical research, yet a unique advantage of the film setting is the availability of micro data on the identity of individuals behind each investment vehicle and the market segment targeted by each investment, thus enabling a more nuanced explanation linking multidivisional strategy and economic returns.…”

“…First, theories of multidivisional organization have explored the equilibrium conditions that keep the costs and benefits of the multidivisional form in balance. Some theories are cast specifically around the components of economic returns, such as multidivisional investment (Gertner et al., ; Bernardo et al., ) or labor incentives (Aghion and Tirole, ; Harstad, ); other theories integrate these internal components with organizational design in connection to product market competition (Veendorp, ; Faulí‐Oller and Giralt, ; Alonso et al., ; Mialon, ; Dessein et al., ). While these frameworks differ in their assumptions, results, and mechanisms, they converge in concluding that multidivisional operation implies a high degree of decentralization that can be beneficial to profitability, letting divisional managers focus on what they do best in their product markets and investment decisions.…”

Product Bundling and Incentives for Mergers and Strategic Alliances

“…A few studies have shown that firms may have strategic incentives to maintain competition among their operating units. For examples, see Baye, Crocker, and Ju (1996) and Mialon (2008). In the present model, if a merged firm chooses to maintain competition within the merging partners, the resulting structure resembles that of a strategic alliance.…”