Geographic Clustering: Does Local M&A Activity Affect a Firm's Acquisitiveness?

42 Pages Posted: 1 Jun 2018

See all articles by Frederik P. Schlingemann

Frederik P. Schlingemann

University of Pittsburgh - Finance Group; European Corporate Governance Institute (ECGI)

Anjana Rajamani

Erasmus University Rotterdam (EUR)

Date Written: June 1, 2018

Abstract

We explore geographic clustering across economic areas and local influences in M&A activity. Our analyses show there is local concentration in M&A deal activity across industries and time throughout the sample period of 35 years. We uncover a strong positive association between aggregate levels of local deal activity and local valuation measures and find that firm-level acquisitiveness is associated with local valuation levels and local deal activity outside their own industry. Our results are driven primarily by stock acquisitions and hold for both related and unrelated deals as well as for deals within and across geographic areas. Our results suggest that local (over) valuation waves best explain geographic clustering in M&A. We find no support that industry shocks or endogenous social interactions among local firms explain geographic clustering in M&A.

Keywords: geographic clustering, mergers and acquisitions, local concentration, valuation

JEL Classification: G31

Suggested Citation

Schlingemann, Frederik Paul and Rajamani, Anjana, Geographic Clustering: Does Local M&A Activity Affect a Firm's Acquisitiveness? (June 1, 2018). Available at SSRN: https://ssrn.com/abstract=3188924 or http://dx.doi.org/10.2139/ssrn.3188924

Frederik Paul Schlingemann (Contact Author)

University of Pittsburgh - Finance Group ( email )

368A Mervis Hall
Pittsburgh, PA 15260
United States
(412) 648 1847 (Phone)
(412) 648 1693 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Anjana Rajamani

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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