Do mergers and acquisitions improve firms' financial performance? The case of the U.S. generic drug industry

Antonio J. Trujillo; Emmanuel E. Garcia-Morales; Gabriel Kabarriti; Gerard Anderson

doi:10.1002/mde.3074

Do mergers and acquisitions improve firms' financial performance? The case of the U.S. generic drug industry

Antonio J. Trujillo, Emmanuel E. Garcia-Morales, Gabriel Kabarriti, Gerard Anderson

Bloomberg School of Public Health

Research output: Contribution to journal › Article › peer-review

Abstract

This paper examines the financial performance of all mergers and acquisitions (M&A) involving publicly traded companies that occurred in the U.S. generic drug industry from 1996 to 2017. The control group was chosen using a nearest neighbor matching procedure. Our empirical strategy controls for unobservable firm-specific fixed effects as well M&A fixed effects. Our findings suggest that profit levels do not change significantly following M&As, but total revenues decline after M&As. Firms undergoing an M&A cut operating expenses but not through reduction in labor expenses or number of employees.

Original language	English (US)
Pages (from-to)	10-24
Number of pages	15
Journal	Managerial and Decision Economics
Volume	41
Issue number	1
DOIs	https://doi.org/10.1002/mde.3074
State	Published - Jan 1 2020

ASJC Scopus subject areas

Business and International Management
Strategy and Management
Management Science and Operations Research
Management of Technology and Innovation

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10.1002/mde.3074

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abstract = "This paper examines the financial performance of all mergers and acquisitions (M&A) involving publicly traded companies that occurred in the U.S. generic drug industry from 1996 to 2017. The control group was chosen using a nearest neighbor matching procedure. Our empirical strategy controls for unobservable firm-specific fixed effects as well M&A fixed effects. Our findings suggest that profit levels do not change significantly following M&As, but total revenues decline after M&As. Firms undergoing an M&A cut operating expenses but not through reduction in labor expenses or number of employees.",

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Do mergers and acquisitions improve firms' financial performance? The case of the U.S. generic drug industry

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