Difference in Political Ideology and Its Impact on Mergers and Acquisitions

Chune Young Chung, Dongnyoung Kim and Weishen Wang

Bulletin of Economic Research, 2025, vol. 77, issue 4, 501-520

Abstract: We examine the extent to which ideological differences between acquiring and target firms influence the likelihood of deal completion and the magnitude of announcement returns. Our empirical analysis shows that deals are 26% more likely to be completed when the political ideologies of the acquirer and target are closely aligned. This result holds even after controlling for widely accepted deal characteristics influencing both deal completion and market response to deal announcements. Furthermore, acquirers ideologically closer to their targets achieve announcement returns that are 1 to 2 percentage points higher than their more distant counterparts. This effect persists even after controlling for geographic proximity and other established determinants of announcement returns. These findings indicate that corporate political ideology plays a significant role in determining the success of mergers and acquisitions.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/boer.12501

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:buecrs:v:77:y:2025:i:4:p:501-520

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0307-3378

Access Statistics for this article

More articles in Bulletin of Economic Research from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().