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Macroeconomic factors and firm’s cross-border merger and acquisitions

Author

Listed:
  • A. N. Bany-Ariffin

    (University Putra Malaysia)

  • Mohamad Hisham

    (University Putra Malaysia)

  • Carl B. McGowan

    () (Norfolk State University)

Abstract

Abstract This study investigates the impact of macroeconomic variables on the wealth effects of cross-border acquisitions by Malaysian multinational companies. The sample consists of 159 cross-border acquisitions by Malaysian MNCs bidding in 22 countries around the world from 2000 to 2007. The macroeconomic variables examined in this study are foreign economic condition, GNP correlation between countries, and level of economic development of target country. The findings indicate that, foreign economic condition affects the wealth effect negatively, while the level of economic development of target country affects the wealth effect positively. Aside from the macroeconomic variables, we also find that English or non-English language, government’s rules index and the telecommunication infrastructure all play certain roles in the Malaysian cross-border acquisitions. Implied from this study is that, value creation of the Malaysian cross-border acquisitions is a function of the foreign economic condition and the level of economic development of the target foreign country.

Suggested Citation

  • A. N. Bany-Ariffin & Mohamad Hisham & Carl B. McGowan, 2016. "Macroeconomic factors and firm’s cross-border merger and acquisitions," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(2), pages 277-298, April.
  • Handle: RePEc:spr:jecfin:v:40:y:2016:i:2:d:10.1007_s12197-014-9304-4
    DOI: 10.1007/s12197-014-9304-4
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Cross-border acquisitions; M&A; Event study; Malaysian MNC; Gains from international diversification;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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