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

Research output: Contribution to journalArticle

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 languageEnglish (US)
JournalManagerial and Decision Economics
DOIs
StateAccepted/In press - Jan 1 2019

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Mergers and acquisitions
Personnel
Industry
Profitability
Fixed effects
Expenses
Financial performance
Generic drugs
Profit
Nearest neighbor
Employees
Labor
Control strategy
Revenue

ASJC Scopus subject areas

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

Cite this

Do mergers and acquisitions improve firms' financial performance? The case of the U.S. generic drug industry. / Trujillo, Antonio J.; Garcia-Morales, Emmanuel E.; Kabarriti, Gabriel; Anderson, Gerard.

In: Managerial and Decision Economics, 01.01.2019.

Research output: Contribution to journalArticle

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