Cross-border Spillovers: How US Financial Conditions affect M&As Around the World / Katharina Bergant, Prachi Mishra, Raghuram Rajan.

Format:

Book

Author/Creator:

Bergant, Katharina.

Contributor:

National Bureau of Economic Research.

Mishra, Prachi.

Rajan, Raghuram.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31235.

NBER working paper series no. w31235

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

We find that financial conditions in the core have significant spillover effects on cross-border mergers and acquisitions (M&As). On average, a 1 percentage point easing of the IMF US Financial Conditions Index is associated with approximately a 10% higher volume of cross-border M&As. The spillovers are stronger for countries with more liabilities denominated in foreign currency (or in US dollars). We find that the spillovers are driven by changes in US financial conditions, rather than changes in Euro Area conditions. Deals that happen when financial conditions in the US are tighter (and therefore acquisitions fewer) add more value for the acquirers, as reflected in higher acquirer excess stock returns around the announcement.

Notes:

Print version record

May 2023.