False Friends? On the Effect of Bureaucracy, Informality, Corruption and Conflict in Ukraine on Foreign and Domestic Acquisitions

Viktoriya Gonchar, Oleksandr Kalinin, Olena Khadzhynova and Killian J. McCarthy
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Viktoriya Gonchar: Marketing and Business Administration Department, Pryazovskyi State Technical University (PSTU), Mariupol, 87500 Donetsk, Ukraine
Oleksandr Kalinin: Marketing and Business Administration Department, Pryazovskyi State Technical University (PSTU), Mariupol, 87500 Donetsk, Ukraine
Olena Khadzhynova: Department of Economic Theory and Business Undertakings, Educational-Scientific Institute of Economics and Management, Pryazovskyi State Technical University (PSTU), Mariupol, 87500 Donetsk, Ukraine
Killian J. McCarthy: Faculty of Economics and Business, University of Groningen, 9700 AE Groningen, The Netherlands

JRFM, 2022, vol. 15, issue 4, 1-14

Abstract: Ukraine had had its ups and downs in recent years. It has, for example, dramatically improved its ease of doing business ( EOBB ), and it has made some progress reducing the relative size and influence of its shadow economy ( Shadow ). But, the Russian invasion of 2014 ( Conflict ) forced it to take a few developmental steps backwards. In this paper, we consider the effect of these factors, positive and negative, on the number of mergers and acquisitions, involving Ukrainian firms. We construct a sample of 4030 acquisitions in the period 1 January 2000–31 December 2020. Our results suggest that while the number of acquisitions by domestic firms increases in efficiency (+ EOBB ), transparency (? Shadow ) and peace (? Conflict ), the number of foreign acquisitions increases in bureaucracy (? EOBB ), in informality (+ Shadow ), and unrest (+ Conflict ). From an academic perspective, our findings fit with some recent work, while providing new insights too. From a policy perspective, our findings that the number of foreign acquisitions is negatively affected by Ukraine’s attempts to modernize and improve its economy and is positively affected by the ongoing conflict with Russia, makes us wonders what type of ‘false friends’ make such investments.

Keywords: mergers and acquisitions; Ukrainian mergers and acquisition; merger motives; merger trends; institutional forces; ease of doing business index; shadow economy; conflict; Ukraine (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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