M&As and political uncertainty: Evidence from the 2016 US presidential election

Salim Chahine, Wassim Dbouk and Moataz El-Helaly

Journal of Financial Stability, 2021, vol. 54, issue C

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: Macroeconomic uncertainty; Mergers; Tariff-Jumping hypothesis; Protectionism (search for similar items in EconPapers)
JEL-codes: B17 D81 F38 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 (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:54:y:2021:i:c:s1572308921000255

DOI: 10.1016/j.jfs.2021.100866

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