Foreign investor reactions to risk and uncertainty in antitrust: U.S. merger policy investigations and the deterrence of foreign acquirer presence

Joseph Clougherty and Nan Zhang ()
Additional contact information
Nan Zhang: California State University Stanislaus

Journal of International Business Studies, 2021, vol. 52, issue 3, No 6, 454-478

Abstract: Abstract Motivated by the potential for antitrust and competition policies to be protectionist in effect, we formulate the theoretical prior that merger policy deters foreign acquirer participation in local M&A markets. The policy risk and policy uncertainty characteristic of merger review may negatively affect foreign acquirers more so than domestic acquirers, thereby disadvantaging foreign acquisitions of local firms and deterring future cross-border investment activities. We test this prior by employing sector-level data on U.S. merger policy investigations and foreign acquirer presence in U.S. M&A markets over the 2002–2017 period. Our panel-data methodological approach indicates that the risk and uncertainty characteristic of U.S. merger policy disproportionately deters the acquisition activities of foreign investors. The empirical results also suggest that the application of competition and merger policies in other national jurisdictions – where there is less of a strong commitment to antitrust principles – might also be effectively protectionist.

Keywords: cross-border mergers and acquisitions; policy-oriented studies; MNE–host-country relationships; business/government interaction and relationships (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://link.springer.com/10.1057/s41267-020-00338-6 Abstract (text/html)
Access to full text is restricted to subscribers.

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:pal:jintbs:v:52:y:2021:i:3:d:10.1057_s41267-020-00338-6

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-020-00338-6

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().