Economic and Political Uncertainty: The Case of U.S. Acquiring Firms

30 Pages Posted: 3 Apr 2019

See all articles by Hamid Sakaki

Hamid Sakaki

Central Connecticut State University

Elisabeta Pana

Central Connecticut State University

Surendranath Jory

University of Southampton - Southampton Business School

Date Written: March 10, 2019

Abstract

We examine the impact of economic and political uncertainty on the choice made by U.S. firms to expand through domestic or cross-border mergers and acquisitions. Using recently developed indexes of economic and political uncertainty, we document that U.S. firms use cross-border mergers and acquisitions to diversify the risk arising from policy uncertainty. We find that the investment horizon of institutional investors plays a significant role in mitigating the uncertainty affecting the deals. Overall, our results provide support to the argument that stable institutional investors are effective monitors of corporate strategies.

Keywords: Merger and acquisition, Institutional investors, Political uncertainty, Economic uncertainty

JEL Classification: G34

Suggested Citation

Sakaki, Hamid and Pana, Elisabeta and Jory, Surendranath, Economic and Political Uncertainty: The Case of U.S. Acquiring Firms (March 10, 2019). Available at SSRN: https://ssrn.com/abstract=3350732 or http://dx.doi.org/10.2139/ssrn.3350732

Hamid Sakaki

Central Connecticut State University ( email )

1615 Stanley Street
New Britian, CT 06050
United States
8608322378 (Phone)
8608322378 (Fax)

Elisabeta Pana (Contact Author)

Central Connecticut State University ( email )

1615 Stanley Street
New Britain, CT 06050
United States

Surendranath Jory

University of Southampton - Southampton Business School ( email )

Southampton, SO17 1BJ
United Kingdom

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