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Merger and Acquisition: Definitions, Motives, and Market Responses

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Encyclopedia of Finance

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Abstract

Along with globalization, merger and acquisition has become not only a method of external corporate growth, but also a strategic choice of the firm enabling further strengthening of core competence. The mega-mergers in the last decades have also brought about structural changes in some industries, and attracted international attention. A number of motivations for merger and acquisition are proposed in the literature, mostly drawn directly from finance theory but with some inconsistencies. Interestingly, distressed firms are found to be predators and the market reaction to these is not always predictable. Several financing options are associated with takeover activity and are generally specific to the acquiring firm. Given the interest in the academic and business literature, merger and acquisition will continue to be an interesting but challenging strategy in the search for expanding corporate influence and profitability.

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Acknowledgements

We would like to thank many friends in University of London (U.K.) and National Chi Nan University (Taiwan) for valuable comments. We also want to thank our research assistant Chiumei Huang for preparing the manuscript and proofreading several drafts of the manuscript. Last, but not least, special thanks go to the Executive Editorial Board of the Encyclopedia in Finance in Springer, who expertly managed the development process and superbly turned our final manuscript into a finished product.

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Authors and Affiliations

  1. University of London, London, UK

    Jenifer Piesse

  2. Department of Finance & Economics, Rutgers University, Piscataway, NJ, USA

    Cheng-Few Lee

  3. National Chi-Nan University, Nantou, Taiwan, Republic of China

    Lin Lin & Hsien-Chang Kuo

Authors
  1. Jenifer Piesse
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  2. Cheng-Few Lee
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  3. Lin Lin
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  4. Hsien-Chang Kuo
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Correspondence to Cheng-Few Lee .

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Editors and Affiliations

  1. Department of Finance & Economics, Rutgers University, Piscataway, NJ, USA

    Cheng-Few Lee

  2. Center for PBBEF Research, Phoenix, AZ, USA

    Alice C. Lee

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Piesse, J., Lee, CF., Lin, L., Kuo, HC. (2022). Merger and Acquisition: Definitions, Motives, and Market Responses. In: Lee, CF., Lee, A.C. (eds) Encyclopedia of Finance. Springer, Cham. https://doi.org/10.1007/978-3-030-91231-4_28

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