Does Common Ownership Increase Incentives for Mergers and Acquisitions?

By Miguel Antón, José Azar, Mireia Giné & Luca X. Lin – 

Acquisitions are on average value-destroying for acquirer shareholders, while it has been shown that non-merging rivals generally gain after such “bad deals.” Value-destroying acquisitions have been largely attributed to managerial discretion, yet why do shareholders approve such decisions? This article illustrates that acquirer shareholders holding a diversified industry portfolio can benefit from value-destroying acquis