Cross-Country Determinants of Mergers and Acquisitions
40 Pages Posted: 29 May 2003
Date Written: September 2003
We study the determinants of mergers and acquisitions around the world by focusing on differences in laws and regulation across countries. We find that the volume of M&A activity is significantly larger in countries with better accounting standards and stronger shareholder protection. The probability of an all-cash bid decreases with the level of shareholder protection in the acquirer country. In cross-border deals targets are typically from countries with poorer investor protection than acquirers, suggesting that cross-border transactions play a governance role by improving the degree of investor protection within target firms.
Keywords: Mergers and acquisitions, Corporate governance, Investor protection
JEL Classification: G21, G28, G32
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