When authorities assess whether a corporate merger can be approved, they primarily consider how the merger affects competition in the market where the merging firms operate. However, new peer-reviewed research by CEFAU researcher Jackie M.L. Chan shows that corporate mergers also make the overall economy more volatile. Larger business cycle fluctuations impact firms, households, and public finances alike. Policymakers and competition authorities should therefore be aware that, beyond the effects on market competition, mergers may also have broader implications for economic stability.

Today, we are publishing a CEFAU Research Brief based on Jackie's article which summarizes and contextualizes the findings. Key takeaways include:

• Corporate mergers increase volatility in the overall Danish economy
• Mergers may, however, make the involved firms more stable
• Firms that engage in mergers are significantly larger than other firms.

The brief explains how the results were derived and why they are relevant for policymakers and competition authorities.