The Effects of Antitrust Laws on Horizontal Mergers: International Evidence

Authors

Chune Young Chung
Iftekhar Hasan
JiHoon Hwang
Incheol Kim, The University of Texas Rio Grande ValleyFollow

Document Type

Article

Publication Date

2024

Abstract

This study examines how antitrust law adoptions affect horizontal merger and acquisition (M&A) outcomes. Using the staggered introduction of competition laws in 20 countries, we find antitrust regulation decreases acquirers’ five-day cumulative abnormal returns surrounding horizontal merger announcements. A decrease in deal value, target book assets, and industry peers' announcement returns are consistent with the market power hypothesis. Exploiting antitrust law adoptions addresses a downward bias to an estimated effect of antitrust enforcement (Baker (2003)). The potential bias from heterogeneous treatment effects does not nullify our results. Overall, antitrust policies seem to deter post-merger monopolistic gains, potentially improving customer welfare.

Comments

© The Author(s), 2023. Original published version available at https://doi.org/10.1017/S0022109023000467

Publication Title

Journal of Financial and Quantitative Analysis

DOI

10.1017/S0022109023000467

Recommended Citation

Chung, Chune Young, Iftekhar Hasan, JiHoon Hwang, and Incheol Kim. "The Effects of Antitrust Laws on Horizontal Mergers: International Evidence." Journal of Financial and Quantitative Analysis (2023): 1-52.