CEF.UP – FIN Seminar/Webinar

Thursday – June 6^th, 2024 at 1:00 p.m. | Room 305| Online

Manipulating Growth: The Unintended Consequences of Antitrust Policies on Small Firms

Gustavo Grullon– Rice University

Abstract:

“Recent evidence indicates that acquirers avoid antitrust regulatory scrutiny by targeting firms whose size fall below exemption thresholds. We find evidence that potential targets near these thresholds intentionally reduce their size, which makes them more attractive targets for stealth acquisitions. They achieve this by limiting asset growth and increasing their payouts when they have excess cash. Our results indicate that this effect is especially pronounced for firms with liquidity needs and is driven, in part, by exit strategy motives. Overall, our results reveal that antitrust exemptions can create perverse incentives that can offset public policies aimed at promoting the growth of small firms.”