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Government Regulation and Structural Change in the Corporate Acquisitions Market: The Impact of the Williams Act

Published online by Cambridge University Press:  06 April 2009

Paul H. Malatesta  and
Rex Thompson
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Abstract

This paper presents evidence on how the Williams Act affected the corporate acquisitions market. The acquisition process is modeled and three hypotheses about the Act's effects are discussed. These hypotheses imply differing restrictions on how the Act changes the model's parameters. Parameter changes are estimated but we are unable to reliably discriminate between two of the three hypotheses using the classical statistical testing approach, though the third hypothesis is reliably rejected. Bayesian analysis using a diffuse prior is employed to make formal probability comparisons among the hypotheses. The most probable hypothesis, according to the results, implies that the Williams Act reduced the expected gross present value of acquisition attempts.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 28 , Issue 3 , September 1993 , pp. 363 - 379
Copyright
Copyright © School of Business Administration, University of Washington 1993

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