Date of Award
Doctor of Philosophy (PhD)
Conventional models assume competition improves corporate efficiency as firms strive to outperform competitors. In the context of agency models, the link between competition and managerial behavior becomes fuzzy. Hart (1983) and Schmidt (1997) posit that competition reduces managerial slack. Scharfstein (1988) argues that competition might increase managerial shirking. Recent studies on the relation between managerial compensation and competition further document conflicting evidence. In this study, I examine the effect of product market competition on corporate mergers and acquisitions. My initial results suggest that the definition of competition is critical in evaluating corporate mergers and acquisitions. Using three new dimensions (product substitutability, market density, and entry cost) to measure competition, I find the manager's M&A decisions could have different implications across the three dimensions. Regarding acquisition premium, my results consistently show a negative relation between competition and the size of the premium.
"Product Market Competition and Corporate Mergers and Acquisitions"
(2009). Doctor of Philosophy (PhD), Dissertation, , Old Dominion University, DOI: 10.25777/8am1-dm61