Immigration Fear Induced Populism and Cross-Border Acquisitions
54 Pages Posted: 7 Jul 2020 Last revised: 24 Sep 2021
Date Written: June 24, 2020
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, lower 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 if the State is run by political parties holding anti-immigrant populist views and, also for the labor-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
Suggested Citation: Suggested Citation