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Corporate Acquisitions and Firm-level Uncertainty: Domestic versus Cross-Border Deals

Y. Bai, Sourafel Girma () and Alejandro Riaño ()

Working Papers from Department of Economics, City University London

Abstract: This paper studies the impact of corporate acquisitions on the uncertainty faced by acquiring firms. We use data for UK public companies from 2004 to 2017 and employ a matching estimator combined with difference-in-differences to control for the endogenous selection of firms into acquiring status. Acquisitions exert a large and persistent effect on the volatility of stock returns of acquirers and is characterized by a pecking order: domestic takeovers lead to a reduction in the uncertainty faced by the acquirer, while cross-border acquisitions|particularly those involving target firms in emerging markets|engender a positive response in acquirers' volatility.

Keywords: Mergers and Acquisitions; Uncertainty; Volatility; Globalization; Stock Returns; UK (search for similar items in EconPapers)
Date: 2020
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https://openaccess.city.ac.uk/id/eprint/23921/1/Dept_Econ_WP2009.pdf

Related works:
Working Paper: Corporate Acquisitions and Firm-Level Uncertainty: Domestic Versus Cross-Border Deals (2020) Downloads
Working Paper: Corporate acquisitions and firm-level uncertainty: Domestic versus cross-border deals (2020) Downloads
Working Paper: Corporate acquisitions and firm-level uncertainty: Domestic versus cross-border deals (2020) Downloads
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