New research explains who acquires whom, whether payment is made in cash or stock, what valuation consequences arise from mergers, and why there are merger waves.

By looking carefully at data on individual stock prices, it is easy to find many examples of "comovement" - groups of stocks whose prices tend to move together. For instance, prices of stocks in the same industry tend to move together, as do the prices of small-cap stocks, value stocks, and closed-end funds.