The Impact of Transatlantic M&A Activity on the Dollar/Euro Exchange Rate

Fender, Ingo; Galati, Gabriele

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The Impact of Transatlantic M&A Activity on the Dollar/Euro Exchange Rate

BIS Quarterly Review November 2001

11 Pages Posted: 18 Apr 2012

See all articles by Ingo Fender

Ingo Fender

Bank for International Settlements (BIS)

Gabriele Galati

De Nederlandsche Bank

Date Written: November 9, 2001

Abstract

This special feature explores the extent to which transatlantic M&A deals are associated with movements in the dollar/euro exchange rate over the period 1 January 1999 to 30 September 2001. Three hypotheses are typically put forward to explain the potential impact of cross-border mergers on the exchange rate: the transactions effect, the portfolio effect and the announcement effect. In this paper, we test whether the last of these effects shows up in transatlantic M&A data and also provide some evidence on the first hypothesis.

Keywords: Exchange rates, M&A activity

JEL Classification: F00, F31

Suggested Citation: Suggested Citation

Fender, Ingo and Galati, Gabriele, The Impact of Transatlantic M&A Activity on the Dollar/Euro Exchange Rate (November 9, 2001). BIS Quarterly Review November 2001, Available at SSRN: https://ssrn.com/abstract=1473682