Private and Public Merger Waves





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    • Maksimovic and Yang are from the University of Maryland and Phillips is from the University of Southern California and NBER. This research was supported by NSF grant #0965328 and was conducted while the authors were Special Sworn Status researchers of the U.S. Census Bureau at the Center for Economic Studies. We would like to thank the Editor (Cam Harvey), an anonymous referee, and an Associate Editor for many helpful comments. In addition we wish to thank Jose-Miguel Gaspar, Jarrad Harford, David Robinson, and seminar participants at Florida State University, Norwegian School of Economics and Business Administration, UCLA, University of Paris Dauphine, IFN conference at Stockholm, York University, University of California at Riverside, University of Rochester, California Corporate Finance Conference, UCLA/USC Annual Conference, NBER Corporate Finance Group, UBC 2010 Summer Conference, University of Virginia, Washington University 2010 Corporate Finance Conference, and the WFA 2010 meetings. We also thank researchers at the Center for Economic Studies for their helpful comments, and Antonio Falato at the Federal Reserve for providing data on Commercial and Industrial (C&I) loan rates. Research results and conclusions expressed are those of the authors and do not necessarily reflect the views of the Census Bureau. This paper has been screened to ensure that no confidential data are revealed.


We document that public firms participate more than private firms as buyers and sellers of assets in merger waves and their participation is affected more by credit spreads and aggregate market valuation. Public firm acquisitions realize higher gains in productivity, particularly for on-the-wave acquisitions and when the acquirer's stock is liquid and highly valued. Our results are not driven solely by public firms' better access to capital. Using productivity data from early in the firm's life, we find that better private firms subsequently select to become public. Initial size and productivity predict asset purchases and sales 10 and more years later.