The Impact of Economic Nationalism in Europe on the Returns to Rivals of Crossborder M&A Bids
52 Pages Posted: 22 Mar 2017 Last revised: 11 Nov 2017
Date Written: October 10, 2017
We examine the wealth effects of economic nationalism on domestic and foreign rivals using a novel sample of government blocked EU cross-border takeover bids. Regressions show a significantly larger net contagion effect of 0.73% (€31m) on bid announcement for domestic rivals relative to foreign. Government intervention results in larger negative returns, which become even more negative at bid resolution, especially for domestic rivals. Domestic rivals lose significantly more (€23m) over the whole bid period, likely consistent with lower future takeover likelihood. We show that economic nationalism has a significant cost, which is not only confined to the EU blocking country.
Keywords: Economic nationalism, takeovers, rivals, abnormal returns, contagion
JEL Classification: G34, G38, K21
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