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Cross-border Spillovers: How US Financial Conditions affect M&As Around the World

Author

Listed:
  • Katharina Bergant
  • Prachi Mishra
  • Raghuram Rajan

Abstract

We study how U.S. monetary policy shocks transmit to cross-border merger and acquisition (M&A) activity. Using country- and firm-level data, tighter U.S. policy is shown to reduce both the value and the number of cross-border deals. The effects are especially pronounced for acquirer firms with larger foreign-currency liabilities, consistent with a net worth channel. Reflecting agency motives for acquisitions, deals announced under more accommodative U.S. conditions underperform ex post, indicating potential capital misallocation.

Suggested Citation

  • Katharina Bergant & Prachi Mishra & Raghuram Rajan, 2023. "Cross-border Spillovers: How US Financial Conditions affect M&As Around the World," NBER Working Papers 31235, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31235
    Note: IFM
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    Cited by:

    1. Jiang, Mobing & Chen, Xinyu & Xiao, Mingyue & Zhang, Yuning & Wen, Wu & Chen, Xiaohua, 2025. "From connect to conquer: capital market liberalization and Chinese firms' cross-border mergers and acquisitions," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    2. Zeng, Hongjun & Abedin, Mohammad Zoynul & Wu, Ran & Ahmed, Abdullahi D., 2024. "Asymmetric dependency among US national financial conditions and clean energy markets," Global Finance Journal, Elsevier, vol. 63(C).
    3. Aiyar, Shekhar & Malacrino, Davide & Presbitero, Andrea F., 2024. "Investing in friends: The role of geopolitical alignment in FDI flows," European Journal of Political Economy, Elsevier, vol. 83(C).
    4. André Sanchez Pacheco, . "Consolidated foreign wealth of nations: Nationality-based measures of international exposure," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.

    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets

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