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The Euro and its Impact on the Number, Size, Performance and Regional Spread of European Mergers and Acquisitions

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  • Killian J. McCarthy
  • Wilfred Dolfsma

Abstract

M c C arthy K. J. and D olfsma W. The euro and its impact on the number, size, performance and regional spread of European mergers and acquisitions, Regional Studies . The macroeconomic effects of the euro have been extensively studied. The literature has, however, paid significantly less attention to the microeconomic consequences and few authors have considered if and how the euro has impacted firm-level decision-making. This paper explores if, how and in what way the euro has impacted one firm-level decision: whether to merge with or acquire another firm. This paper builds a sample of 19 362 acquisitions, announced in the period 1990-2014. It shows that the euro has dramatically increased the number, size and performance of European mergers and acquisitions. Importantly, it also notes that the euro has altered the geographic spread of European acquisitions. The paper reports that since the introduction of the euro, acquirers have made increasingly distant acquisitions and have preferred targets in peripheral regions to those in the core. The results also hint at the suggestion that the euro may have led acquirers to prefer Eurozone to non-Eurozone targets. From a policy perspective, it is concluded, therefore, that the euro has significantly impacted firm behaviour and has contributed, in a positive sense, to regional integration.

Suggested Citation

  • Killian J. McCarthy & Wilfred Dolfsma, 2015. "The Euro and its Impact on the Number, Size, Performance and Regional Spread of European Mergers and Acquisitions," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1407-1422, August.
    • Handle: RePEc:taf:regstd:v:49:y:2015:i:8:p:1407-1422
    DOI: 10.1080/00343404.2015.1007936
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    References listed on IDEAS

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    1. Romain Duval & Jørgen Elmeskov, 2005. "The Effects of EMU on Structural Reforms in Labour and Product Markets," OECD Economics Department Working Papers 438, OECD Publishing.
    2. Berger, Helge & Nitsch, Volker, 2008. "Zooming out: The trade effect of the euro in historical perspective," Journal of International Money and Finance, Elsevier, vol. 27(8), pages 1244-1260, December.
    3. Inês Cabral & Frank Dierick & Jukka Vesala, 2002. "Banking integration in the euro area," Occasional Paper Series 06, European Central Bank.
    4. Flam, Harry & Nordström, Håkan, 2006. "Euro Effects on the Intensive and Extensive Margins of Trade," Seminar Papers 750, Stockholm University, Institute for International Economic Studies.
    5. Vesala, Jukka & Cabral, Inês & Dierick, Frank, 2002. "Banking integration in the euro area," Occasional Paper Series 6, European Central Bank.
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    Cited by:

    1. Viktoriya Gonchar & Oleksandr Kalinin & Olena Khadzhynova & Killian J. McCarthy, 2022. "False Friends? On the Effect of Bureaucracy, Informality, Corruption and Conflict in Ukraine on Foreign and Domestic Acquisitions," JRFM, MDPI, vol. 15(4), pages 1-14, April.
    2. Jiawei Wu & Yehua Dennis Wei & Wen Chen, 2020. "Spatial proximity, localized assets, and the changing geography of domestic mergers and acquisitions in transitional China," Growth and Change, Wiley Blackwell, vol. 51(3), pages 954-976, September.
    3. Na Qin & Yiping Liu, 2022. "Performance Compensation Commitment in Mergers and Acquisitions," Sustainability, MDPI, vol. 14(23), pages 1-14, December.

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