How Pandemics Affect International Investment: Evidence from M&As during SARS-CoV-1 in China

41 Pages Posted: 22 Feb 2021

See all articles by Chi Zhang

Chi Zhang

HKUST(GZ); HKUST Fok Ying Tung Research Institute

Ivan T. Kandilov

North Carolina State University - Department of Agricultural & Resource Economics

Mark D. Walker

North Carolina State University

Date Written: February 2021

Abstract

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

Suggested Citation

ZHANG, Chi and Kandilov, Ivan T. and Walker, Mark D., How Pandemics Affect International Investment: Evidence from M&As during SARS-CoV-1 in China (February 2021). Available at SSRN: https://ssrn.com/abstract=3789113 or http://dx.doi.org/10.2139/ssrn.3789113

Chi ZHANG

HKUST(GZ) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

HKUST Fok Ying Tung Research Institute ( email )

Ivan T. Kandilov

North Carolina State University - Department of Agricultural & Resource Economics ( email )

Box 8109
3332 Nelson Hall
Raleigh, NC 27695-8109
United States

Mark D. Walker (Contact Author)

North Carolina State University ( email )

Raleigh, NC 27695
United States

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