Corporate mergers are bad news for the thousands of workers who lose their jobs. It’s a different story for the CEOs who can earn hundreds of millions of dollars from the deals. (Buzzfeed)
We are in the midst of a massive merger wave. Since the late 1990s, the number of major airlines has dropped from seven to four, and the number of major car rental companies has fallen from eight to three. There have been so many mergers over the past twenty years that the Wilshire 5000, a common stock index, contains only 3,500 firms, because there aren’t enough eligible companies.
There are many reasons for this, but a key one often goes overlooked. Executives and bankers are paid a lot of money when they sell firms, regardless of whether it’s a good idea. If Congress wants to reduce unnecessary mergers, stopping these kickbacks is an important way to do it.