Cross-border mergers and acquisitions: does the exchange rate matter? Some evidence for Canada

George J. Georgopoulos

Canadian Journal of Economics, 2008, vol. 41, issue 2, pages 450-474

Abstract: Theoretical and empirical studies investigating the relationship between the exchange rate and FDI have generated mixed results. Using bilateral Canadian-U.S. industry level count data on cross-border mergers and acquisitions (M&As) and conditioning on industry tariff rates, value added share of industries, industry M&A trend activity, and the number of establishments, we find evidence that a real dollar depreciation of the home currency leads to an increase in the probability of foreign M&As but only in high R&D industries. These empirical results are consistent with Blonigen's asset acquisition hypothesis. Results on European M&As of Canadian firms also lean towards this result.

JEL-codes: F21 F41 (search for similar items in EconPapers)
Date: 2008
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