Why Do Some Merger and Acquisitions Deals Fail? A Global Perspective

Attah-Boakye, R., Guney, Y., Hernandez-Perdomo, E, and Mun, J. (2020). Why do some M&A deals fail? A global perspective. International Journal of Finance and Economics, forthcoming.

51 Pages Posted: 14 Jul 2020

See all articles by Rexford Attah-Boakye

Rexford Attah-Boakye

University of Hull

Yilmaz Guney

Coventry University

Elvis Alexander Hernandez Perdomo

University of Hull; Central University of Venezuela (UCV)

Johnathan Mun

Government of the United States of America - Naval Postgraduate School

Date Written: June 19, 2020

Abstract

We analyze why some merger and acquisitions (M&A) deals are withdrawn paying particular attention to the economic freedom and legal environment of countries. We use a large dataset based on deals worldwide from over 140 countries during the period 1977 to 2014. Our core finding is that the likelihood of a deal’s withdrawal tends to increase if the economic freedom/ quality of legal environment of the acquiring (target) firm’s country is higher (lower). These core findings matter more for the non-financial sector, during non-crisis years, and in developed financial markets. We also report that the deals have higher tendency to be withdrawn if the target firm’s size is larger or its profitability is lower; and the acquiring firm’s size is smaller. Furthermore, our analyses reveal that deal characteristics (i.e., deal attitude, means of payment, deal size, ownership sought) also matter in affecting the outcome of announced M&A deals.

Keywords: Mergers and acquisitions; Deal failure; Economic freedom; Institutional environment; Firm size and profitability.

JEL Classification: G34

Suggested Citation

Attah-Boakye, Rexford and Guney, Yilmaz and Hernandez Perdomo, Elvis Alexander and Mun, Johnathan, Why Do Some Merger and Acquisitions Deals Fail? A Global Perspective (June 19, 2020). Attah-Boakye, R., Guney, Y., Hernandez-Perdomo, E, and Mun, J. (2020). Why do some M&A deals fail? A global perspective. International Journal of Finance and Economics, forthcoming., Available at SSRN: https://ssrn.com/abstract=3631516

Rexford Attah-Boakye

University of Hull ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Yilmaz Guney (Contact Author)

Coventry University ( email )

Coventry, CV1 5FB
United Kingdom

Elvis Alexander Hernandez Perdomo

University of Hull ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Central University of Venezuela (UCV) ( email )

University City
Los Chaguaramos
Caracas, 1050
Venezuela

Johnathan Mun

Government of the United States of America - Naval Postgraduate School ( email )

1 University Circle
Monterey, CA 93943-5001
United States

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