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Cited by 623

The DOI matches its Crossref record; 13 of the 13 references it cites were found in a registry or an index.

The Q-Theory of Mergers

Jovanovic, Boyan, Rousseau, Peter L·2002·American Economic Review
DOI 10.1257/000282802320189249
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Abstract

The Q-theory of investment says that a firm's investment rate should rise with its Q. We argue here that this theory also explains why some firms buy other firms. We find that 1. A firm's merger and acquisition (M&A) investment responds to its Q more -- by a factor of 2.6 -- than its direct investment does, probably because M&A investment is a high fixed cost and a low marginal adjustment cost activity, 2. The typical firm wastes some cash on M&As, but not on internal investment, i.e., the 'Free-Cash Flow' story works, but explains a small fraction of mergers only, and 3. The merger waves of 1900 and the 1920's, `80s, and `90s were a response to profitable reallocation opportunities, but the `60s wave was probably caused by something else.

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Metadata

Authors
Jovanovic, B., & Rousseau, P. L.
Venue
American Economic Review
Publisher
American Economic Association
Published
2002-04-01
Volume
92
Issue
2
Pages
198-204
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/000282802320189249
OpenAlex
W2002818056
Cited by
623
References
13
FWCI
44.33
Type
journal article
Language
en
Open access
closed

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CoChat. (2026). Citation check: The Q-Theory of Mergers. https://app.cochat.ai/papers/10.1257/000282802320189249
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Jovanovic, B., & Rousseau, P. L. (2002). The Q-Theory of Mergers. American Economic Review. https://doi.org/10.1257/000282802320189249

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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

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