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ISDS disputes, adjudication and cross-border M&As

Julan Du and Yifei Zhang

Journal of Corporate Finance, 2024, vol. 87, issue C

Abstract: ISDS claims are associated with reductions in the likelihood, frequency, and dollar volume of M&As from claimant home countries to respondent states. The host-state expropriation events underlying ISDS claims show no significant effects. The impact of ISDS claims remains after including traditional country risk metrics. Thus, ISDS claims play a unique role in guiding international investment. They prompt foreign acquirers to adopt risk-avoiding strategies, which affect various deal characteristics. We detect strong substantiation effects of investor-win cases and some acquittal effects of state-win cases. The ISDS claims related to direct expropriations and strong-institution respondent states typically produce more striking effects.

Keywords: ISDS disputes; Host state expropriation events; Cross-border merger deals; Direct and indirect expropriations; Merger deal characteristics (search for similar items in EconPapers)
JEL-codes: F21 G34 K33 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:87:y:2024:i:c:s0929119924000567

DOI: 10.1016/j.jcorpfin.2024.102594

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