Macroeconomic Factors Influencing Cross-border M&As: A Negative Binomial Approach

47 Pages Posted: 13 Feb 2014 Last revised: 21 Jun 2017

Date Written: November 20, 2016

Abstract

The paper examines macroeconomic factors influencing cross-border M&A over 1990-2015 by sampling 5512 worldwide M&A transactions. Using gravity model with a negative binomial approach, the paper finds that the acquiring firms tend to target firms from other nations where (a) per capita GDP is higher; (b) national money is weaker; (c) inflation rates are lower; (d) economic freedom index score is higher; and (e) national stock market capitalization is relatively smaller; than their own country (the acquirer's country).

Besides, the paper also finds that the acquiring firms are more likely to target firms from other nations which (f) are geographically closer in terms of distance; (g) have common geographic borders; (h) have larger population; and (i) have common languages with the acquirers.

Keywords: Mergers & Acquisitions; Cross-border M&A; Macroeconomic Factors; A Negative Binomial Approach; The Gravity Model

JEL Classification: G34, C31, F21, F23, F62

Suggested Citation

Sovbetov, Yhlas, Macroeconomic Factors Influencing Cross-border M&As: A Negative Binomial Approach (November 20, 2016). Available at SSRN: https://ssrn.com/abstract=2394509 or http://dx.doi.org/10.2139/ssrn.2394509

Yhlas Sovbetov (Contact Author)

London School of Commerce ( email )

London
United Kingdom

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