Cross-Country Determinants of Mergers and Acquisitions

34 Pages Posted: 20 Jun 2003

See all articles by Stefano Rossi

Stefano Rossi

Bocconi University; Krannert School of Management; Centre for Economic Policy Research (CEPR)

Paolo F. Volpin

City University London - Faculty of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2003

Abstract

This Paper studies the determinants of mergers and acquisitions around the world during the 1990s by focusing on differences in laws and regulation across countries. We find that the volume of M&A activity and the premium paid are significantly larger in countries with better investor protection. This result indicates that an active market for mergers and acquisitions is a more important component of the corporate governance regime of countries with better investor protection. We also show that in cross-border deals, the targets are typically from countries with poorer investor protection than the acquirers. Hence, cross-border transactions play a governance role by improving the degree of investor protection within target firms. This finding suggests that an increase in cross-border transactions may generate a worldwide convergence of corporate governance systems.

Keywords: Mergers and acquisitions, corporate governance, investor protection

JEL Classification: G21, G28, G32

Suggested Citation

Rossi, Stefano and Volpin, Paolo F., Cross-Country Determinants of Mergers and Acquisitions (May 2003). CEPR Discussion Paper No. 3889. Available at SSRN: https://ssrn.com/abstract=418721

Stefano Rossi

Bocconi University ( email )

Via Roentgen 1
Milano, MI 20136
Italy

Krannert School of Management ( email )

West Lafayette, IN 47907-1310
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Paolo F. Volpin (Contact Author)

City University London - Faculty of Finance ( email )

London, EC2Y 8HB
Great Britain

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

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