How Pandemics Affect International Investment: Evidence from M&As during SARS-CoV-1 in China
41 Pages Posted: 22 Feb 2021
Date Written: February 2021
We evaluate the impact of SARS-CoV-1 infection rates on inbound cross-border mergers & acquisitions (M&As) in China. Using transaction level data on cross-border M&A from 2002 to 2005, we show that Chinese provinces which experienced high level of SARS-CoV-1 infection rates, also suffered a significant decline in cross-border M&A activity, both in terms of number of transactions and overall volume. The overall negative impact is entirely driven by decline in deals for non-state-owned targets. The large, negative effect was short-lived but lost deals were not recouped. The negative effects were larger and longer lasting for provinces with less-affected neighbors suggesting that the presence of good substitutes exacerbated the negative effects.
Keywords: SARS-CoV-1, Cross-border M&A, Capital Flows
JEL Classification: F15, F21, F23, G11, G34
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