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
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: Suggested Citation