Cross-border Spillovers: How US Financial Conditions affect M&As Around the World

Katharina Bergant, Prachi Mishra and Raghuram Rajan

No 31235, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how U.S. monetary policy shocks transmit to cross-border merger and acquisition (M&A) activity. Using country- and firm-level data, tighter U.S. policy is shown to reduce both the value and the number of cross-border deals. The effects are especially pronounced for acquirer firms with larger foreign-currency liabilities, consistent with a net worth channel. Reflecting agency motives for acquisitions, deals announced under more accommodative U.S. conditions underperform ex post, indicating potential capital misallocation.

JEL-codes: G1 (search for similar items in EconPapers)
Date: 2023-05
New Economics Papers: this item is included in nep-com, nep-fdg and nep-ifn
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