Vertical Acquisitions and Market Reactions

We investigate the financial impact of vertical acquisitions of firms in the last decade. Specifically, we examine the market reactions to two major merger and acquisition (M&A) events.  Studies of M&A are of interest not... [ view full abstract ]

We investigate the financial impact of vertical acquisitions of firms in the last decade. Specifically, we examine the market reactions to two major merger and acquisition (M&A) events.  Studies of M&A are of interest not only to academic audience, but to the government regulatory agencies (e.g. SEC and FTC).  The main role of the government regulatory agencies is to protect consumer welfare by enforcing the antitrust law to ensure fair market competition.  Most M&A activities belong to "horizontal integration" in which the two firms are direct competitors in the industry.  Our research focuses on the less studied “vertical integration”.  The two cases we examine are very well-known events. The findings from our empirical research will help shed light and provide insight on the financial impact of these activities to various (upstream and downstream) firms affected.