Do state visits affect cross-border mergers and acquisitions?

Mark Aleksanyan, Zhiwei Hao, Evangelos Vagenas-Nanos and Patrick Verwijmeren

Journal of Corporate Finance, 2021, vol. 66, issue C

Abstract: This paper studies the relation between state visits and cross-border merger and acquisition (M&A) activity. Based on 1161 state visits and 11,531 cross-border acquisitions, we find that corporations from visiting countries are more likely to acquire corporations in countries hosting the visit. Domestic acquisitions in the host country or M&As with non-visiting countries are not elevated. Evidence from instrumental variable analysis points towards a causal effect of state visits on M&A activity. Further analysis shows that the elevated M&A activity originating from visiting countries can be attributed to business networking and a reduction in investment uncertainty and cultural barriers.

Keywords: Political state visits; Cross-border acquisitions; Cultural differences; Networking; Investment uncertainty (search for similar items in EconPapers)
JEL-codes: F21 G30 G34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:66:y:2021:i:c:s0929119920302443

DOI: 10.1016/j.jcorpfin.2020.101800

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