M&As and Political Uncertainty: Evidence from the 2016 US Presidential Election

51 Pages Posted: 20 Dec 2023

See all articles by Salim Chahine

Salim Chahine

American University of Beirut - Olayan School of Business; European Corporate Governance Institute (ECGI)

Wassim Dbouk

American University of Beirut

Moataz El-Helaly

School of Business, The American University in Cairo

Date Written: Feb 18, 2021

Abstract

This paper investigates whether the takeover market has been affected by heightened macroeconomic uncertainty, following President Trump’s Election, both in the US and globally. We have based our analysis on a four-year period around the 2016 US elections, and as such we have observed an increase in M&A deals and associated valuations, after the election; this was especially true for cross-border deals acquiring U.S. targets, consistent with a tariff-jumping hypothesis. The high target valuations are also the product of the implementation of a lower corporate tax rate, which reveals positive externalities for U.S. targets, stemming from the protectionist and lower corporate tax initiatives of the regime.

Keywords: Economic Uncertainty; Mergers and Acquisitions; Taxes

JEL Classification: B17, D81, F38, G34

Suggested Citation

Chahine, Salim and Dbouk, Wassim and El-Helaly, Moataz, M&As and Political Uncertainty: Evidence from the 2016 US Presidential Election (Feb 18, 2021). Journal of Financial Stability, No. 100866, 2021, Available at SSRN: https://ssrn.com/abstract=4667710

Salim Chahine

American University of Beirut - Olayan School of Business ( email )

Bliss Street
Beirut 1107 2020
Lebanon
961-1-374-374 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Wassim Dbouk

American University of Beirut ( email )

Bliss Street
Beirut 1107 2020
Lebanon

Moataz El-Helaly (Contact Author)

School of Business, The American University in Cairo ( email )

New Cairo
New Cairo
Egypt
11341 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
198
PlumX Metrics