The Asymmetric Response of Mergers and Acquisitions  in the North American Oil and Gas Industry to Oil Price Changes

Abstract:

This article examines the effects that oil price changes have on oil and gas industry M&A activities in North America.  To investigate this topic thoroughly, unlike early studies we take specific account of the asymmetric effects of oil price changes in our modeling procedure, using the nonlinear autogressive distributed lag (ARDL) model of Shin, Yu and Greenwood-Nimmo. The results provide strong evidence that changes in oil prices have asymmetric effects on oil and gas industry M&A activities in both the short-run and long-run.  More importantly, oil and gas industry M&A activities appear to respond more to oil price decreases than to increases.

Keywords:

Asymmetry; Mergers and acquisitions (M&A); Nonlinear ARDL; North America; Oil prices

JEL Classifications:

C22, D22, L70, Q41

Citation as: 

Park, J. S., and J. H. Baek (2019). "The Asymmetric Response of Mergers and Acquisitions  in the North American Oil and Gas Industry to Oil Price Changes", Review of Economics & Finance, vol.15, no.1, pp. 23-30.