Financial Protectionism, M&A Activity, and Shareholder Wealth
56 Pages Posted: 28 Mar 2018 Last revised: 19 Aug 2019
Date Written: July 22, 2018
The Committee on Foreign Investment in the United States (CFIUS) added new frictions to the U.S. takeover market after the enactment of the Foreign Investment and National Security Act (FINSA). Foreign takeovers decline for U.S. firms more susceptible to these frictions after FINSA, including research intensive firms (by 56 percent) and those with greater ability to disrupt U.S. supply chains (by 36 percent). These firms lose 3.12 percent of their value over a three-day window surrounding nine events related to the passage of FINSA. Our findings suggest a tradeoff between national security and shareholder wealth.
Keywords: FINSA, CFIUS, financial protectionism, economic nationalism, mergers and acquisitions, event study analysis, corporate control
JEL Classification: F52, G14, G34, G38
Suggested Citation: Suggested Citation