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An Analysis of the Inward Cross-border Mergers and Acquisitions in the UK: A Macroeconomic Perspective

Author

Listed:
  • Agyenim Boateng

    () (Nottingham University Business School, University of Nottingham, Ningbo Campus, PR China)

  • Ruthira Naraidoo

    () (Department of Economics, University of Pretoria)

  • Moshfique M. Uddin

    (Lecturer in Finance, School of Accounting & Financial Services, Leeds Metropolitan University, UK)

Abstract

Most of the growth in international production over the past decade has been carried out via cross-border mergers and acquisitions. Yet previous empirical work relating to CBM&As has been confined to firm-specific factors. This is against the backdrop that researchers have not been able to develop a coherent theory explaining the increasing trends of CBM&As activity. Building on prior studies, this study attempts to extend the few existing studies by using a simple empirical nonlinear framework to analyse the number of cross-border mergers and acquisitions inflows between 1987 and 2008 into the UK from a macroeconomic perspective. The main findings are that the response of the inflow is asymmetric as there is more persistence during stock market booms versus recessions. There are asymmetries with respect to relative prices suggesting that an improvement in the terms of trade leads to higher inflows once the growth of stock prices is above a threshold level of 8%. Other factors which have significant bearing on CBM&As inflows are the rate of inflation and growth in real GDP.

Suggested Citation

  • Agyenim Boateng & Ruthira Naraidoo & Moshfique M. Uddin, 2009. "An Analysis of the Inward Cross-border Mergers and Acquisitions in the UK: A Macroeconomic Perspective," Working Papers 200924, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:200924
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Boateng, Agyenim & Hua, Xiuping & Nisar, Shaista & Wu, Junjie, 2015. "Examining the determinants of inward FDI: Evidence from Norway," Economic Modelling, Elsevier, vol. 47(C), pages 118-127.
    2. Hsueh, Shun-Jen & Tsao, Yao Chun & Tu, Chien-Heng & Chiu, Yung-Ho & Liu, Shu-Bing, 2014. "Can M&A activities act as a predictor of the performance of economic growth or stock prices?," Economic Modelling, Elsevier, vol. 42(C), pages 430-438.
    3. Samuel S Jibao & Niek Schoeman & Ruthira Naraidoo, 2010. "Fiscal Regime Changes and the Sustainability of Fiscal Imbalance in South Africa: A Smooth Transition Error-Correction Approach," Working Papers 201023, University of Pretoria, Department of Economics.
    4. repec:ibn:ibrjnl:v:10:y:2017:i:6:p:178-188 is not listed on IDEAS
    5. Sehleanu Mariana, 2015. "The Influence Of Home Country Macroeconomic Factors On Inward Cross-Border Mergers And Acquisitions: The Case Of Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 584-592, July.
    6. Reddy, Kotapati Srinivasa, 2015. "Determinants of Cross-border Mergers and Acquisitions: A Comprehensive Review and Future Direction," MPRA Paper 63969, University Library of Munich, Germany, revised 2015.

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    Keywords

    Cross-border mergers & acquisitions; Macro-economic factors; UK; nonlinear LSTAR;

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