Determinants of Cross-Border Mergers and Acquisitions

Authors

  • ISIL EREL,

  • ROSE C. LIAO,

  • MICHAEL S. WEISBACH

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    • Erel and Weisbach are with the Ohio State University, Fisher College of Business, and Liao is with Rutgers Business School at Newark and New Brunswick. We thank Anup Agrawal, Malcolm Baker, Phil Davies, Mara Faccio, Charlie Hadlock, Campbell Harvey (the Editor), Jim Hines, Andrew Karolyi, Simi Kedia, Sandy Klasa, Tanakorn Makaew, Pedro Matos, Taylor Nadauld, John Sedunov, Léa Stern, René Stulz, Jérôme Taillard, two referees, and seminar participants at Chinese University of Hong Kong, HKUST, IDC, Lingnan University, Michigan State University, Ohio State University, Ohio University, Rutgers University, Seton Hall University, University of Alabama, University of Maryland, and Washington University for very helpful suggestions.


ABSTRACT

The vast majority of cross-border mergers involve private firms outside of the United States. We analyze a sample of 56,978 cross-border mergers between 1990 and 2007. We find that geography, the quality of accounting disclosure, and bilateral trade increase the likelihood of mergers between two countries. Valuation appears to play a role in motivating mergers: firms in countries whose stock market has increased in value, whose currency has recently appreciated, and that have a relatively high market-to-book value tend to be purchasers, while firms from weaker-performing economies tend to be targets.

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