Industry Concentration, Firm Size and Entry-Timing in Merger Waves

Main Article Content

Lin Lin
Ngou Teng Pun
Zhongda He


As early mover advantage and late mover advantage have been discussed for decades, the conditions for the best use of them are yet unclear. Using the U.S. merger data during 2000–2019, this study examines the entry-timing and the post-merger performance of 1,376 bidders in the merger waves recognised. We find that early movers have advantages with higher post-merger performance in a merger wave, while the effect of late mover advantage is not significant. Moreover, early mover advantage can only be implemented in competitive industries. Our analysis further provides the entry-timing strategies for large firms and small/mid enterprises, respectively. Our results indicate that late mover advantage can only be adopted in large companies, while small/mid firms should be followers, not early or late movers, in high concentration industries. Overall, our study sheds new light on the entry-timing in a merger wave with the consideration of different market concentration environment and different firm size.

Article Details

How to Cite
Industry Concentration, Firm Size and Entry-Timing in Merger Waves. (2023). Asian Academy of Management Journal of Accounting and Finance, 19(2), 259-291.


Ahern, K. R., & Harford, J. (2014). The importance of industry links in merger waves. The Journal of Finance, 69(2), 527–576.

Ali, A., Klasa, S., & Yeung, E. (2014). Industry concentration and corporate disclosure policy. Journal of Accounting and Economics, 58(2–3), 240–264.

Andonova, V., Rodriguez, Y., & Sanchez, I. D. (2013). When waiting is strategic: Evidence from Colombian M&As 1995–2008. Journal of Business Research, 66, 1736–1742.

Barber, B. M., & Lyon, J. D. (1997). Detecting long-run abnormal stock returns: The empirical power and specification of test statistics. Journal of Financial Economics, 43(3), 341–372.

Boulding, W., & Christen, M. (2001). First-mover disadvantage. Harvard Business Review, 79, 20–21.

Brouthers, K. D., Geisser, K. D., & Rothlauf, F. (2016). Explaining the internationalization of ibusiness firms. Journal of International Business Studies, 47, 513–534.

Carow, K., Heron, R., & Saxton, T. (2004). Do early birds get the returns? An empirical investigation of early‐mover advantages in acquisitions. Strategic Management Journal, 25, 563–585.

Chen, K., Hite, G. L., & Cheng, D. C. (1989). Barriers to entry, concentration, and Tobin’s q ratio. Quarterly Journal of Business and Economics, 28(2), 32–49.

Cho, D-S., Kim, D-J., & Rhee, D. K. (1998). Latecomer strategies: Evidence from the semiconductor industry in Japan and Korea. Organization Science, 9, 489–505.

Cho, S., & Chung, C. Y. (2022). Review of the literature on merger waves. Journal of Risk and Financial Management, 15(10), 432.

Coff, R. W. (1997). Human assets and management dilemmas: Coping with hazards on the road to resource-based theory. The Academy of Management Review, 22(2), 374–402.

D’aveni, R. A. (2010). Hypercompetition. Simon and Schuster.

Damania, R., Fredriksson, P. G., & Osang, T. (2005), Polluters and collective action: Theory and evidence. Southern Economic Journal, 72(1), 167–185.

Doan, T. T., Sahib, P. R., & van Witteloostuijn, A. (2016). The role of timing in a merger wave on overcoming challenges in the M&A pre-merger process. Academy of Management Proceedings, 2016(1), 14545.

Doan, T. T., Sahib, P. R., & van Witteloostuijn, A. (2020). Is timing everything? The timing of an M&A announcement in a merger wave. In S. Finkelstein, & C. L. Cooper. (Eds.), Advances in mergers and acquisitions (Vol. 19, pp. 1–16). Emerald Publishing Limited.

Dowell, G., & Swaminathan, A. (2006). Entry timing, exploration, and firm survival in the early US bicycle industry. Strategic Management Journal, 27(12), 1159–1182.

Faizan, M., Khan, I., & Ilyas, M. (2019). Impact of mergers and acquisitions on the financial performance of bidding banks in Pakistan. Global Social Sciences Review, 4, 342–350.

Gentzkow, M., & Shapiro, J. M. (2008). Competition and truth in the market for news. Journal of Economic Perspectives, 22(2), 133–154.

Goel, A. M., & Thakor, A. V. (2010). Do envious CEOs cause merger waves? The Review of Financial Studies, 23, 487–517.

Gorton, G., Kahl, M., & Rosen, R. J. (2009). Eat or be eaten: A theory of mergers and firm size. The Journal of Finance, 64(3), 1291–1344. 6261.2009.01465.x

Hackbarth, D., & Miao, J. (2012). The dynamics of mergers and acquisitions in oligopolistic industries. Journal of Economic Dynamics and Control, 36, 585–609.

Harford, J. (2005). What drives merger waves? Journal of Financial Economics, 77, 529– 560.

Harris, M. S. (1998). The association between competition and managers’ business segment reporting decisions. Journal of Accounting Research, 36, 111–128.

Holmberg, E. (2023). Do merger waves create long-term value for nordic acquiring firms? [Master’s thesis, University of Helsinki].

Jarrell, G. A., Brickley, J. A., & Netter, J. M. (1988). The market for corporate control: The empirical evidence since 1980. Journal of Economic Perspectives, 2, 49–68.

Kim, E. H., & Singal, V. (1993). Mergers and market power: Evidence from the airline industry. The American Economic Review, 83(3), 549–569.

Klepper, S. (1996). Entry, exit, growth, and innovation over the product life cycle. The American Economic Review, 86(3), 562–583.

Lieberman, M. B., & Montgomery, D. B. (1988). First‐mover advantages. Strategic Management Journal, 9, 41–58.

Liozu, S. M. (2019). Make pricing power a strategic priority for your business. Business Horizons, 62(1), 117–128.

Liu, Y-C, Chen, H-J, & Su, M-C. (2017). Product market competition, type of mergers, and post-merger performance in Taiwan. Pacific-Basin Finance Journal, 46, 292–308.

Loyeung, A. (2019), The role of boutique financial advisors in mergers and acquisitions. Australian Journal of Management, 44(2), 212–247.

Madura, J., Ngo, T., & Viale, A. M. (2012). Why do merger premiums vary across industries and over time? The Quarterly Review of Economics and Finance, 52, 49–62.

Makadok, R. (1998). Can first‐mover and early‐mover advantages be sustained in an industry with low barriers to entry/imitation? Strategic Management Journal, 19, 683–696.<683::AID-SMJ965>3.0.CO;2-T

Martínez‐Ferrero, J., Ruiz‐Cano, D., & García‐Sánchez, I. M. (2016). The causal link between sustainable disclosure and information asymmetry: The moderating role of the stakeholder protection context. Corporate Social Responsibility and Environmental Management, 23, 319–332.

Matsumoto, A., Merlone, U., & Szidarovszky, F. (2012). Some notes on applying the Herfindahl- Hirschman Index. Applied Economics Letters, 19, 181–184.

McKendrick, D. G., Doner, R. F., & Haggard, S. (2021). From Silicon Valley to Singapore: Location and competitive advantage in the hard disk drive industry. Stanford University Press.

McNamara, G. M., Haleblian, J., & Dykes, B. J. (2008). The performance implications of participating in an acquisition wave: Early mover advantages, bandwagon effects, and the moderating influence of industry characteristics and acquirer tactics. Academy of Management Journal, 51, 113–130.

Noda, T., & Collis, D. J. (2001). The evolution of intraindustry firm heterogeneity: Insights from a process study. Academy of Management Journal, 44, 897–925.

Ozer, M., & Lee, S-H. (2009). When do firms prefer individual action to collective action in the pursuit of corporate political strategy? A new perspective on industry concentration. Business and Politics, 11, 1–21.

Peteraf, M. A. (1993). The cornerstones of competitive advantage: a resource‐based view. Strategic Management Journal, 14(3), 179–191.

Querbes, A., & Frenken, K. (2017). Evolving user needs and late-mover advantage. Strategic Organization, 15(1), 67–90.

Rabier, M. R. (2017). Acquisition motives and the distribution of acquisition performance. Strategic Management Journal 38, 2666–2681.

Rahman, M. A. (2022). A critical review of neoclassical and behavioural theories of merger waves. Financial Studies, 26(1), 6–22.

Roberts, T. (2014). When bigger is better: A critique of the Herfindahl-Hirschman Index’s use to evaluate mergers in network industries. Pace Law Review, 34(2), 894–946.

Shleifer, A. (2004). Does competition destroy ethical behavior? American Economic Review, 94(2), 414–418.

Sirower, M. L. (1997). The synergy trap: How companies lose the acquisition game. The Free Press.

Sonenshine, R. (2020). Merger waves: Are buyers following the herd or responding to structural queues? Eurasian Business Review, 10, 287–308.

Suarez, F. F., Grodal, S., & Gotsopoulos, A. (2015). Perfect timing? Dominant category, dominant design, and the window of opportunity for firm entry. Strategic Management Journal, 36(3), 437–448.

Van Horen, F., & Pieters, R. (2013). Preference reversal for copycat brands: Uncertainty makes imitation feel good. Journal of Economic Psychology, 37, 54–64.

Villalonga, B., & McGahan, A. M. (2005). The choice among acquisitions, alliances, and divestitures. Strategic Management Journal, 26, 1183–1208.

Wang, S., Cavusoglu. H., & Deng, Z. (2016). Early mover advantage in e-commerce platforms with low entry barriers: The role of customer relationship management capabilities. Information & Management, 53, 197–206.

Williamson, O. E. (1985). The economic institutions of capitalism: firms, markets, relational contracting. New York: The Free Press.

Xu, E. Q. (2017). Cross-border merger waves. Journal of Corporate Finance, 46, 207– 231.

Zhong, Q., Shen, H., Yun, X., Chen, Y., Ren, Y., Xu, H., Shen, G., Du, W., Meng, J., Li, W., Ma, J., & Tao, S. (2020). Global sulfur dioxide emissions and the driving forces. Environmental Science and Technology, 54(11), 6508–6517.

Zhu, F, & Iansiti M. (2012). Entry into platform‐based markets. Strategic Management Journal, 33(1), 88–106.