World Market for Mergers and Acquisitions
AbstractDespite the fact that one-third of worldwide mergers involve firms from different countries, the vast majority of the academic literature on mergers studies domestic mergers. What little has been written about cross-border mergers has focused on public firms, usually from the United States. Yet, the vast majority of cross-border mergers involve private firms that are not from the United States. We provide an analysis of a sample of 56,978 cross-border mergers occurring between 1990 and 2007. We first characterize the patterns of who buys whom: Geography matters, with firms being much more likely to purchase firms in nearby countries than in countries far away. Purchasers are usually but not always from developed countries and they tend to purchase firms in countries with lower accounting standards. A significant factor in determining acquisition patterns is currency movements; firms tend to purchase firms from countries relative to which the currency of the acquirers country has appreciated. In addition, economy-wide factors reflected in the countrys stock market returns lead to acquisitions as well. Both the currency and stock market effect could suggest either misvaluation or wealth explanations. Our evidence is more consistent with the wealth explanation than the misvaluation explanation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for Financial Research in its series SIFR Research Report Series with number 75.
Length: 43 pages
Date of creation: 20 Sep 2010
Date of revision: 01 Jun 2011
Publication status: Forthcoming as Erel, Isil, Rose C. Liao and Michael S. Weisbach, 'World Market for Mergers and Acquisitions' in Journal of Finance.
Note: Please find an updated version on http://fisher.osu.edu/fin/faculty/weisbach/wpapers.html
Contact details of provider:
Postal: Institute for Financial Research Drottninggatan 89, SE-113 60 Stockholm, Sweden
Web page: http://www.sifr.org/
More information through EDIRC
Mergers; Currency movements; Market movements; Valuation;
Other versions of this item:
- Isil Erel & Rose C. Liao & Michael S. Weisbach, 2009. "World Markets for Mergers and Acquisitions," NBER Working Papers 15132, National Bureau of Economic Research, Inc.
- Erel, Isil & Liao, Rose C. & Weisbach, Michael S., 2009. "World Markets for Mergers and Acquisitions," Working Paper Series 2009-11, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- F30 - International Economics - - International Finance - - - General
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
- NEP-COM-2010-09-25 (Industrial Competition)
- NEP-IFN-2010-09-25 (International Finance)
- NEP-IND-2010-09-25 (Industrial Organization)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
- MING DONG & David Hirshleifer & SCOTT RICHARSON & Siew Hong Teoh, 2004.
"Does Investor Misvaluation Drive the Takeover Market?,"
- Ming Dong & David Hirshleifer & Scott Richardson & Siew Hong Teoh, 2006. "Does Investor Misvaluation Drive the Takeover Market?," Journal of Finance, American Finance Association, vol. 61(2), pages 725-762, 04.
- Nicolas Coeurdacier & Roberto A. De Santis & Antonin Aviat, 2009. "Cross-border mergers and acquisitions and European integration," Economic Policy, CEPR & CES & MSH, vol. 24, pages 55-106, 01.
- Bruce A. Blonigen & Ronald B. Davies, 2002. "Do Bilateral Tax Treaties Promote Foreign Direct Investment?," NBER Working Papers 8834, National Bureau of Economic Research, Inc.
- Michael Klein & Joe Peek & Eric Rosengren, 2000.
"Troubled Banks, Impaired Foreign Direct Investment: The Role of Relative Access to Credit,"
NBER Working Papers
7845, National Bureau of Economic Research, Inc.
- Michael W. Klein & Joe Peek & Eric S. Rosengren, 2002. "Troubled Banks, Impaired Foreign Direct Investment: The Role of Relative Access to Credit," American Economic Review, American Economic Association, vol. 92(3), pages 664-682, June.
- Michael W. Klein & Eric Rosengren & Joe Peek, 2000. "Troubled banks, impaired foreign direct investment: the role of relative access to credit," Working Papers 00-4, Federal Reserve Bank of Boston.
- Anusha Chari & Paige P. Ouimet & Linda L. Tesar, 2010. "The Value of Control in Emerging Markets," Review of Financial Studies, Society for Financial Studies, vol. 23(4), pages 1741-1770, April.
- Bris, Arturo & Brisley, Neil & Cabolis, Christos, 2008. "Adopting better corporate governance: Evidence from cross-border mergers," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 224-240, June.
- Beata K. Smarzynska & Shang-Jin Wei, 2000. "Corruption and Composition of Foreign Direct Investment: Firm-Level Evidence," NBER Working Papers 7969, National Bureau of Economic Research, Inc.
- Arturo Bris & Christos Cabolis, 2005.
"The Value of Investor Protection: Firm Evidence from Cross-Border Mergers,"
Yale School of Management Working Papers
amz2455, Yale School of Management.
- Arturo Bris & Christos Cabolis, 2008. "The Value of Investor Protection: Firm Evidence from Cross-Border Mergers," Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 605-648, April.
- Fan, Joseph P. H. & Morck, Randall & Lixin Colin Xu & Yeung, Bernard, 2007. "Does"good government"draw foreign capital ? Explaining China's exceptional foreign direct investment inflow," Policy Research Working Paper Series 4206, The World Bank.
- Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2001. "Repatriation Taxes and Dividend Distortions," NBER Working Papers 8507, National Bureau of Economic Research, Inc.
- Matthew Rhodes-Kropf & S. Viswanathan, 2004. "Market Valuation and Merger Waves," Journal of Finance, American Finance Association, vol. 59(6), pages 2685-2718, December.
- Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
- Swenson, Deborah L., 1994. "The impact of U.S. tax reform on foreign direct investment in the United States," Journal of Public Economics, Elsevier, vol. 54(2), pages 243-266, June.
- Malcolm Baker & C. Fritz Foley & Jeffrey Wurgler, 2009. "Multinationals as Arbitrageurs: The Effect of Stock Market Valuations on Foreign Direct Investment," Review of Financial Studies, Society for Financial Studies, vol. 22(1), pages 337-369, January.
- Harford, Jarrad, 2005. "What drives merger waves?," Journal of Financial Economics, Elsevier, vol. 77(3), pages 529-560, September.
- Caiazza, Stefano & Pozzolo, Alberto Franco & Trovato, Giovanni, 2011.
"Do domestic and cross-border M&As differ? Cross-country evidence from the banking sector,"
Economics & Statistics Discussion Papers
esdp11061, University of Molise, Dept. SEGeS.
- Stafano Caiazza & Alberto Franco Pozzolo & Giovanni Trovato, 2011. "Do domestic and cross-border M&As differ? Cross-country evidence from the banking sector," Mo.Fi.R. Working Papers 52, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anki Helmer).
If references are entirely missing, you can add them using this form.