The post merger values of the relevant variables are the end point of what can be imagined as a sequence of actions and reactions by the competing firms as they adjust to the merger. The diversity of the institutional, economic and cultural climate within. If values1,2,3,4, then merger of 3,4 reduces winning bid from 3 to 2. Essential as economics glossary sukromne gymnazium. Union, 2002 and the oecds glossary of industrial organisation economics and. The results obtained using this approach, largely in the united states but also in canada, show that corporate takeovers generally have favourable consequences for shareholders. Learn vocabulary, terms, and more with flashcards, games, and other study tools.
Stockholders own company, shares show fraction of company owned, one vote per share. However, in a vertical merger, there could still be financial and riskbearing economies. Effects of merger on suppliers and customers some implications for antitrust policy team project presentation. Profitability analysis of mergers and acquisitions.
The combining of two or more entities into one, through a purchase acquisition or a pooling of interests. These guidelines outline the present enforcement policy of the department of justice and the federal trade commission the agency concerning horizontal acquisitions and mergers mergers subject to section 7 of the clayton act, 1 to section 1 of the sherman act, 2 or to section 5 of the ftc act. One need not spend much time in business settings to observe that reason does not always seem to rule. The importance of mergers and acquisitions in todays economy rima tamosiuniene1, egle duksaite2 abstract. This glossary of economics is a list of definitions of terms and concepts used in economics, its subdisciplines, and related fields. The importance of mergers and acquisitions in todays economy. Merger control by conducting economic analysis broadly falls into two main categories. The use of economics in competition law 2005, jan 27, brussels the views expressed herein are not purported to reflect those of the federal trade commission, nor any of its commissioners. The research was undertaken to examine 41 cases of domestic mergers in india during the period between 19992009 to ascertain whether post merger economic value addition eva improved or not when compared with pre merger eva of both target and acquiring. Merger analysis, industrial organization theory, and. Whether it is an explanation of how firms work, or people vote, or customers buy, or governments subsidise, economists have examined evidence and produced theories which can be checked against practice. Impact of mergers on post merger economic value addition. Economic development and growth glossary a2 macro term glossary descriptionaaa credit rating the best credit rating that can be given to a corporations bonds, effectively indicating that the risk of default is negligibleabsolute poverty those people who do not have adequate nutritional intake per day.
The oecd glossary of statistical terms contains a comprehensive set of definitions of the main data items collected by the organisation. Economic tools for evaluating competitive harm in horizontal. Boston house, 214 high street, boston spa, west yorkshire, ls23 6ad tel. Oecd glossary of statistical terms european commission. Undoubtedly today we live in a time of significant economic change. Oecd glossary of statistical terms vertical merger. The glossary also contains definitions of key terminology and concepts and commonly used acronyms. Merger simulation begins by selecting a specific model to capture the essence of the competition in a particular industry. Economics structures the definition of the relevant market, and then economics drives the evaluation of the likely competitive effect of the merger. A major benefit, for the owners, of this form of business is that it provides for limited liability for its owners. A corporation can own property and borrow and can be sued in court. This glossary of industrial organisation economics and competition law has been. Glossary of industrial organisation economics and competition.
Purpose, underlying policy assumptions and overview. The spectacular growth of mergers has justifiably prompted many academics and practitioners to investigate. Oecd glossary of statistical terms conglomerate definition. Oecd glossary of statistical terms merger definition. A horizontal merger is a merger between firms that produce and sell the same products, i. Conglomerate firms may emerge through mergers and acquisitions andor investments across a diverse range of industries for a variety of reasons such as minimization of risk, increased access to financial and management resources, and more efficient allocation of. Economic development meaning in the cambridge english.
Dec 31, 2012 economic development and growth glossary 1. Topic 3 reading list shahrur, husayn 2005, industry structure and horizontal takeovers. Automatic stabilisers under certain spending and tax rules, expenditures that automatically increase or taxes that automatically. Aggregate monetary resources broad money without time deposits of post office savings organisation m3. Allow it to occur under a certain condition such as divesting some parts of the business to keep market share low. This glossary contains nontechnical descriptions of all the terms in economics for everyone highlighted in small capitals. Driven by a philosophy of shareholder value they not. Merger simulation provides a precise, quantitative prediction of the unilateral effects of the merger.
Shapiro, commissioned by the directorate for financial, fiscal and enterprise affairs, oecd, 1993. As a result, the smaller target company loses its existence as a separate entity. The mergers can be classified as follows on the basis of forms of integration. The glossary is published on the responsibility of the secretarygeneral of. It is hoped that the glossary will become a practical aid for policymakers. Microeconomics 1991 centrated range, between 1,000 and 1,800, there is a virtual safe harbor for mergers that change the hhi by less than 100, and otherwise. Owners of each premerger firm continue as owners, and the resources of the merging entities are pooled for the benefit of the new entity. The definitions are excerpt from dg comps glossary of terms used in eu competition. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Indeed, the noteworthy intellectual feat of the guidelines. The oecd economics glossary, which is the fruit of the every day work of the oecd s translators and experts, is designed to be an essentially pragmatic reference tool. Cartel clearance phase i merger clearance phase ii merger.
It is hoped that the glossary will become a practical aid for policymakers and others engaged in reform of health services. A merger is a method by which firms can increase their size and expand into existing or new economic activities and markets. Directors board of directors sets company policy, meets. A corporation is a form of business established as an independent legal entity, separate from the individuals who own it. Oecd glossary of statistical terms horizontal merger. The definitions in the oecd glossary are primarily drawn from. Economic tools for evaluating competitive harm in horizontal mergers coordinated effects coordinated effects address whether the merger makes it more likely for a group of firms to coordinate and raise prices. Stock markets seem to take a positive view of announcements that corporations will be merged or taken over. Poverty defined with respect to an absolute material standard of living. Financial economics basic terminology corporate structure a corporation has legal rights somewhat like a person. A conglomerate is a firm or business enterprise having different economic activities in different unrelated industries. Glossary adam smith 1723 1790 regarded as the father of modern economics.
The aggregate implications of mergers and acquisitions. Khemani, adjunct professor at the faculty of commerce and business administration, university of british columbia, b. Economic development and growth glossary a2 macro term glossary descriptionaaa credit rating the best credit rating that can be given to a corporations bonds, effectively indicating that the risk of default is negligibleabsolute poverty those people who do not have adequate nutritional intake per day, or do not have adequate shelter or clothing. Handbook of antitrust economics cambridge, ma, mit press, 2008, 43, 8596. My own academic in the curiosity psychology of organizational behavior started while i was still in practice. Wright, director of the thomas willing institute for the study of financial markets, institutions, and regulations and the nef family chair of political economy, augustana college sd this work is.
Whether it is an explanation of how firms work, or people vote, or customers buy, or governments subsidise, economists have examined evidence and produced theories which. Other case studies can be found in oecd, economic evidence in merger analysis, policy. Economics 43, edited by paulo buccirossi, cambridge. The definitions are excerpt from dg comps glossary of terms used in eu. The role of economists and economic evidence in merger analysis. A conglomerate merger is a merger between firms in unrelated business, e. Mergers and acquisitions motives jrisy motis 1 toulouse school of economics ehess gremaq and university of crete jrissy. Various forms of corporate restructuring exist, including demergers spinoff of a business into a separate legal entity with shares being either transferred to existing shareholders or sold on the market, equity carveouts ipo of a noncontrolling stake in a subsidiary, or selloffs divestiture of a subsidiary. Mergers and acquisitions have become common business tools, implemented by thousands of companies in world. A statutory merger is one in which all the assets and liabilities of the smaller company is acquired by the bigger acquiring company. Merger definition oecd glossary of statistical terms. Economics is the basis of our daily lives, even if we do not always realise it.
Complete economics dictionary complete economics dictionary. Definitions, motives, and market responses chapter pdf available november 20 with 15,280 reads how we measure reads. Donor and beneficiary view terminology as set out by. Merger analysis, industrial organization theory, and merger. In exante analysis, economic researchers try to evaluate possible anticompetitive effects of a proposed merger prudentially either by creating or strengthening a dominant. The behavioral economics of mergers and acquisitions. Coordination does not require an explicit agreement reached in secret meetings. Complete economics dictionary complete economics dictionary a abnormal profit the surplus of revenue over costs enjoyed by a monopoly that is in excess of profit the same firm could expect to earn if it faced competition for its market. In particular, assuming the fixed cost savings are mergerspecific, a cost of prohibiting a merger between firms a and b would be the opportunity cost of continuing to run the plant of firm b. Wright, director of the thomas willing institute for the study of financial markets, institutions, and regulations and the nef family chair of political economy, augustana college sd this work is not ed.
A merger is an agreement that unites two existing companies into one new company. To the extent that this methodology provides a reliable estimate of the competitive effects of a merger, it can reduce or even eliminate debates over which products are to be included or excluded in defining the relevant market. This is the simplest yardstick of economic performance. Profitability analysis of mergers and acquisitions mergers and acquisitions around the globe represent a huge reallocation of resources, within and across countries and therefore, it has been the interest of empirical studies for many years. The poorest developing countries in order to boost their economic. Shapiro, commissioned by the directorate for financial, fiscal and enterprise. Note, a vertical merger would have less potential economies of scale than a horizontal merger e. The contributions are taxdeferred until retirement withdraws occur.
Differs from a consolidation in that no new entity is created from a merger. Merger analysis is a field in which economic theory is systematically applied, dayin, dayout. I propose a categorization of such motives based on the residual. Glossary of industrial organisation economics and competition law, compiled by r. Geoff riley exam boardspecific versions of the as economics course companion 2005 are now available from the tutor2u online store. Dec 03, 2019 a merger can enable a firm to increase in size and gain from many of these factors. Voluntary amalgamation of two firms on roughly equal terms into one new legal entity. A merger can enable a firm to increase in size and gain from many of these factors. Absolute advantage the ability of a country or region to produce a good or service at a lower.
Vertical mergers usually increase economic efficiency, although they may sometimes have an anticompetitive effect. There are several types of mergers and also several reasons why companies complete mergers. Measuring the economic gains of mergers and acquisitions. Analysis of wealth effects on rivals, suppliers, and corporate customers, journal of financial economics. Oecd glossary of statistical terms conglomerate merger.
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