An Analysis of the Inward Cross-border Mergers and Acquisitions in the UK: A Macroeconomic Perspective

Agyenim Boateng (), Ruthira Naraidoo and Moshfique Uddin
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Agyenim Boateng: Nottingham University Business School, University of Nottingham, Ningbo Campus, PR China
Moshfique Uddin: Lecturer in Finance, School of Accounting & Financial Services, Leeds Metropolitan University, UK

No 200924, Working Papers from University of Pretoria, Department of Economics

Abstract: Most of the growth in international production over the past decade has been carried out via cross-border mergers and acquisitions. Yet previous empirical work relating to CBM&As has been confined to firm-specific factors. This is against the backdrop that researchers have not been able to develop a coherent theory explaining the increasing trends of CBM&As activity. Building on prior studies, this study attempts to extend the few existing studies by using a simple empirical nonlinear framework to analyse the number of cross-border mergers and acquisitions inflows between 1987 and 2008 into the UK from a macroeconomic perspective. The main findings are that the response of the inflow is asymmetric as there is more persistence during stock market booms versus recessions. There are asymmetries with respect to relative prices suggesting that an improvement in the terms of trade leads to higher inflows once the growth of stock prices is above a threshold level of 8%. Other factors which have significant bearing on CBM&As inflows are the rate of inflation and growth in real GDP.

Keywords: Cross-border mergers & acquisitions; Macro-economic factors; UK; nonlinear LSTAR (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-11
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Citations: View citations in EconPapers (6)

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