Immigration Fear Induced Populism and Cross-Border Acquisitions

Abstract

We examine whether immigration-related fear sentiments (IFS), that escalate support for populist ideologies and policies, affect the flow of inbound cross-border acquisitions (CBA). Economic arguments postulate that IFS-induced populist policies generate economic uncertainty and significant associated deadweight costs for potential international investors. Consistent with this conjecture, our results show that intensification of IFS leads to a significant decline in inbound CBA activities (number of CBA, less likelihood of receiving acquisition bids and deal completion) in major developed economies. The results also indicate that the inverse nexus between IFS and inbound CBA is stronger in labour-intensive industries.

Keywords: Immigration Fear Sentiments, Populism, Cross-Border Acquisitions, M&A, Mergers and Acquisitions, Policy Uncertainty, Protectionist Policies, Labor Intensity

JEL Classification: F21, F22, F52, G34, G38