Page 67 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 1, 2015, pp. 61-94

that country. During last decades, liberalization and deregulation of energy sector in

specific countries increased M&A activity.

2.2. Mergers and Acquisitions waves

Along with economic and industrial environment, the evolution of M&A activity

is predisposed to take place in cycles, similar to the economic ones. M&A activities

are not as volatile as stock markets, where any event occurred is reflected in stock

price. However, similar to market bubbles mergers and acquisitions activity are

strongly concentrated with high peaks and drops in certain periods of time, thus

referred to ‗waves‘.

Merger and Acquisition activities in United States have occurred in waves. Nelson

(1959) indicated that mergers are highly concentrated in time, clustering during periods

of high stock market valuations, where the form of payment is generally stock. In the

history of the U.S., M&A activity can be characterized by five waves (Weston 2001)

and (Gaughan, 2002). The first wave occurred between 1897 and 1904, the second

between 1916 and 1929, the third between 1965 and 1969, the fourth between 1981 and

1989, and the fifth between 1993 and 2000.

Waves occurred as a result of certain events or changes in industries, such as

innovation, deregulation, and economic shocks and came to an end because of an

economic recession.

The first and second wave were examined by Thorp (1941), Stigler (1950),

Markham (1955), Nelson (1959), Weston (1961), Eis (1969), Lamoreaux (1985),

Leeth and Borg (2000), while the third wave has been studied by Nelson (1966),

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