Abstract

Most of what we know about the merger strategy-shareholder value relationship comes from studies based on the 1948-1979 FTC Large Merger Series. However, the marker for acquisitions changed dramatically in the 1980s, as government policies facilitated ''mergers for efficiency,'' rather than ''merger for diversity.'' We update the list of large mergers through 1988, classify each with a categorical and continuous measure of merger ''relatedness,'' and then calculate three capital market measures of value creation. Regardless of construct definition, we find no evidence that the mergers in the 1980s were more strategic or value creators than those from prior periods.