M&A waves, capital investment and Tobin’s q

Corporate mergers and acquisitions (M&A) are reaching an all-time high this year, with US-based transactions as always on the top.

According to the neoclassical view, M&A waves occur as a result of shocks hitting specific sectors or the economy at large. Behavioral explanations see well-informed managers taking advantage of overvalued asset prices as a justification for M&A cycles. This paper argues that both approaches do not fully explain recent developments.

Download study as PDF (Reading time 20 min)