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The impact of exchange rate movements on mergers and acquisitions FDI

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  • Shetty, Anand
  • Manley, John
  • Kyaw, Nyonyo

Abstract

This paper investigates the effect of exchange rate movements on return outcomes associated with mergers and acquisitions FDI. We examine this relationship for cross-border mergers and acquisitions undertaken in 2001-2010 by 591 U.S. firms using both real and nominal bilateral exchange rates. The analysis of abnormal returns reveals no consistent relationship between the real exchange rate movements and bidder returns. However, we do find a statistically significant positive impact of exchange rate volatility on bidder returns. In addition, we find support for a significant relationship between bidder’s overseas experience with bidder returns and deal size with bidder returns.

Suggested Citation

  • Shetty, Anand & Manley, John & Kyaw, Nyonyo, 2019. "The impact of exchange rate movements on mergers and acquisitions FDI," Journal of Multinational Financial Management, Elsevier, vol. 52.
    • Handle: RePEc:eee:mulfin:v:52-53:y:2019:i::s1042444x19300349
    DOI: 10.1016/j.mulfin.2019.100594
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    More about this item

    Keywords

    FDI; Cross-border mergers and acquisitions; Exchange rate movements; Bidder gains;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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