We analyze a Bayesian merger game under two-sided asymmetric information about firm types. We show that the standard … prediction of the lemons market model–if any, only low-type firms are traded–is likely to be misleading: Merger returns, i.e. the … difference between pre- and post-merger profits, are not necessarily higher for low-type firms. This has two implications. First …

This paper proposes an explanation as to why some mergers fail, based on the interaction between the pre-merger … evidence. Our setup is a global game (integration process) in which players decide whether to participate (merger decision). We …