Financial Protectionism, M&A Activity, and Shareholder Wealth

56 Pages Posted: 23 Jul 2018 Last revised: 19 Aug 2019

See all articles by David Godsell

David Godsell

University of Illinois at Urbana-Champaign

Ugur Lel

University of Georgia - Department of Banking and Finance

Darius P. Miller

Southern Methodist University (SMU) - Finance Department

Multiple version iconThere are 2 versions of this paper

Date Written: July 22, 2018

Abstract

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: mergers and acquisitions, event study analysis, corporate control, financial protectionism, economic nationalism, FINSA, CFIUS

JEL Classification: F52, G14, G34, G38

Suggested Citation

Godsell, David and Lel, Ugur and Miller, Darius P., Financial Protectionism, M&A Activity, and Shareholder Wealth (July 22, 2018). SMU Cox School of Business Research Paper No. 18-23. Available at SSRN: https://ssrn.com/abstract=3218001 or http://dx.doi.org/10.2139/ssrn.3218001

David Godsell

University of Illinois at Urbana-Champaign ( email )

Champaign, IL 61820
United States
1.217.300.0844 (Phone)

HOME PAGE: http://https://business.illinois.edu/profile/david-godsell/

Ugur Lel (Contact Author)

University of Georgia - Department of Banking and Finance ( email )

Terry College of Business
Athens, GA 30602-6253
United States

Darius P. Miller

Southern Methodist University (SMU) - Finance Department ( email )

United States

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