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Cross-border Mergers and Acquisitions and Financial Development: Evidence from Emerging Asia

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  • Juthathip Jongwanich
  • Douglas H. Brooks
  • Archanun Kohpaiboon

Abstract

The paper examines the relationship between cross-border mergers and acquisitions (M&A) and financial development in emerging Asian economies. Bilateral data of cross-border M&A for nine emerging Asian economies during 2000–2009 are analyzed with a sample selection model and panel data model. Estimation results show that the banking sector plays a crucial role in facilitating cross-border M&A while the role of equity markets has increased in importance since, in addition to cash, the issuance of common stock and the exchange of stocks have become a popular form for payment for a deal. Because of the relatively thin market, the corporate bond market plays a limited role in supporting cross-border M&A, which is in contrast to the public bond market. The results also show that financial development in terms of stock and bond markets in the home countries tends to be more important when the target firms reside in more developed countries. In addition to financial development, the paper shows that most of the cross-border M&As are invested in the technology-related and resource-based industries while cheap labor industries are relatively less attractive.
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  • Juthathip Jongwanich & Douglas H. Brooks & Archanun Kohpaiboon, 2013. "Cross-border Mergers and Acquisitions and Financial Development: Evidence from Emerging Asia," Asian Economic Journal, East Asian Economic Association, vol. 27(3), pages 265-284, September.
    • Handle: RePEc:bla:asiaec:v:27:y:2013:i:3:p:265-284
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    Cited by:

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    2. Nayyar, Rishika & Mukherjee, Jaydeep, 2020. "Home country impact on Outward FDI from India," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 385-400.
    3. Bianconi, Marcelo & Tan, Chih Ming, 2019. "Evaluating the instantaneous and medium-run impact of mergers and acquisitions on firm values," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 71-87.
    4. Yusnidah Ibrahim & Jimoh Olajide Raji, 2018. "Cross-border merger and acquisition activities in Asia: the role of macroeconomic factors," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 35(2), pages 307-329, May.
    5. Qin Liang & Ningxu Li & Jie Li, 2018. "How Are the Determinants of Emerging Asia's Cross-Border Mergers and Acquisitions Inflows Different from Outflows?," Asian Economic Papers, MIT Press, vol. 17(1), pages 123-144, Winter/Sp.
    6. Li, Xue & Anwar, Sajid & Peng, Fei, 2022. "Cross-border acquisitions and the performance of Chinese publicly listed companies," Journal of Business Research, Elsevier, vol. 141(C), pages 575-588.
    7. Rishika Nayyar & Jaydeep Mukherjee, 2018. "Outward FDI from India: A macro level examination in the presence of structural breaks," Working Papers 1833, Indian Institute of Foreign Trade.
    8. Osabuohien-Irabor Osarumwense & Drapkin Igor M., 2023. "Global Outward Foreign Direct Investment and Economic Growth Across Income Groups: The Mediating Effect of Home Country Institutions," SAGE Open, , vol. 13(2), pages 21582440231, April.
    9. Hal Hill & Juthathip Jongwanich, 2014. "Emerging East Asian Economies As Foreign Investors: An Analytical Survey," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(03), pages 1-26.
    10. Nurhazrina Mat Rahim & Ruhani Hj. Ali, 2018. "The Role of Country-Level Differences in Influencing ASEAN Firms’ Cross-Border Mergers and Acquisitions (CBMAs) Success," Capital Markets Review, Malaysian Finance Association, vol. 26(1), pages 36-55.
    11. Alin Marius ANDRIEȘ & Sabina CAZAN & Nicu SPRINCEAN, 2022. "The Nexus between Bank M&As and Financial Development," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 5-28, April.
    12. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    13. Hong Zhu & Qi Zhu, 2016. "Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1107-1149, December.

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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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