ARE MERGERS BENEFICIAL OR DETRIMENTAL? EVIDENCE FROM ADVERTISING AGENCIES1 Julian L. Simon, Manouchehr Mokhtari, and Daniel H. Simon We study 33 pairs of advertising agencies that merged be- tween 1947 and 1985, comparing each merging pair against two controls: a) a pair of agencies with combined merger-date bill- ings close to the total billings of the merged unit, and b) a single agency with similar total merger-date billings. Gross revenues are the dependent variable. Results: Merging firms do worse in the short run than controls. Assuming similar subse- quent rates of growth for merging and non-merging firms, a loss of 16 percent of firm value due to merging is implied. .fo page # /article2 mergabs/February 15, 1996 ARE MERGERS BENEFICIAL OR DETRIMENTAL? EVIDENCE FROM ADVERTISING AGENCIES1 Julian L. Simon, Manouchehr Mokhtari, and Daniel H. Simon We study 33 pairs of advertising agencies that merged be- tween 1947 and 1985, comparing each merging pair against two controls: a) a pair of agencies with combined merger-date bill- ings close to the total billings of the merged unit, and b) a single agency with similar total merger-date billings. Gross revenues are the dependent variable. Results: Merging firms do worse in the short run than controls. Assuming similar subse- quent rates of growth for merging and non-merging firms, a loss of 16 percent of firm value due to merging is implied. page 1 /article2 mergabs/February 15, 1996