We examine merger activity and its effect on asset pricing in a firm network economy. Mergers create internal capital …. The possibility of a merger increases the equity value of standalone firms. Higher network dep endence generally increases … merger activity but nevertheless causes lower firm equity values. Recession and expansion, as measured by the average debt …

but not traded), and their core competencies (what can neither be traded nor be learned). A merger is chosen when the two …

This paper analyzes the interaction between financial leverage and takeover activity. We develop a dynamic model of …, and takeover terms, in which the bidder with the lowest leverage wins the takeover contest. Based on the resulting … bidder is below the industry average and that acquirers should lever up after the takeover consummation. The model also …