Does economic policy uncertainty affect cross-border M&As? —— A data analysis based on Chinese multinational enterprises

Fengchun Li, Ting Liang and Hailian Zhang

International Review of Financial Analysis, 2021, vol. 73, issue C

Abstract: This paper analyzes the impact of economic policy uncertainty (EPU) of home and host countries on cross-border mergers and acquisitions (M&As) using EPU indexes and the amount and quantity of China's cross-border M&As in 21 countries from 2001 to 2017. First, we find that uncertainty in the economic policy of the home country drives cross-border M&As, uncertainty in the host country's economic policy significantly inhibits cross-border M&As, and when the economy is in a pro-cyclical period, alleviates the influence of the host country's economic policy uncertainty on M&As. Second, the impact of the host country's economic policy uncertainty on cross-border M&As differs before and after the financial crisis. The host country's economic policy uncertainty is positively correlated with cross-border M&As before the crisis and significantly negatively correlated with it after the crisis. Third, the impact of economic policy uncertainty in the home and host countries on cross-border M&as is significant in developed countries but not significant in developing countries finally, differences in bilateral uncertainty and bilateral market growth are significantly positively correlated with the scale of M&A

Keywords: Cross-border mergers and acquisitions; Economic policy uncertainty; Pro-cyclical period; Bilateral market (search for similar items in EconPapers)
JEL-codes: E22 G30 O30 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:73:y:2021:i:c:s105752192030274x

DOI: 10.1016/j.irfa.2020.101631

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