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The impact of institutional investors on mergers and acquisitions in the United Kingdom

Dimitris Andriosopoulos () and Shuai Yang

Journal of Banking & Finance, 2015, vol. 50, issue C, 547-561

Abstract: In this paper we investigate the impact of institutional ownership on UK mergers and acquisitions. We employ a comprehensive sample of M&As conducted by UK acquirers from 2000 to 2010, thus including a full cycle of peak and trough in M&A waves. We find that institutional investors increase the likelihood of an M&A to be a large, cross-border deal, opting for full control. Moreover, institutional ownership concentration and foreign institutional ownership increase the likelihood of cross-border M&As. In addition, we assess the influence of institutional shareholders’ investment horizon and find that while investment horizon have a negative influence in encouraging cross-border M&As, the presence of long-term investors encourages larger M&As. Finally, even after controlling for the 2007–08 financial crisis the market reacts negatively to the announcement of cross-border M&As.

Keywords: Institutional investors; Mergers and acquisitions; Cross-border; Investment horizon; Endogeneity; Financial crisis (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jbankfin.2014.06.004

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Handle: RePEc:eee:jbfina:v:50:y:2015:i:c:p:547-561