Global Policy Uncertainty and Cross-Border Acquisitions

Dang, M., Nguy, N.V., Mazuren, M., Puwanenthiren, P. and Nguyen, N.T. 2021. Global Policy Uncertainty and Cross-Border Acquisitions. The Quarterly Review of Economics and Finance. 80, pp. 224-235. https://doi.org/10.1016/j.qref.2021.01.020

TitleGlobal Policy Uncertainty and Cross-Border Acquisitions
TypeJournal article
AuthorsDang, M., Nguy, N.V., Mazuren, M., Puwanenthiren, P. and Nguyen, N.T.
Abstract

Policy uncertainty has been documented to have a significant impact on corporate investment decisions. This paper investigates the effect of policy uncertainty on cross-border acquisitions. We find a significant monotonic relationship between the size of the acquired equity stake in a target firm and the level of policy uncertainty in the target’s country of origin. More specifically, the acquirer is less inclined to purchase a sizeable ownership stake in the target firm, if the target is domiciled in unstable macroeconomic environment. Moreover, we find that acquirers are less willing to pay in cash if the target faces high policy uncertainty. The above results do not seem to depend on the quality of the country’s institutional environment and are robust to alternative econometric specifications. Our study discusses policy implications and should be of interest to academics as well as finance practitioners.

KeywordsPolicy Uncertainty
Corporate Acquisition
Cross-Border Acquisition
Investment
JournalThe Quarterly Review of Economics and Finance
Journal citation80, pp. 224-235
ISSN1062-9769
Year2021
PublisherElsevier
Accepted author manuscript
License
CC BY-NC-ND 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.qref.2021.01.020
Publication dates
Published online13 Feb 2021

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Under embargo until 13 Feb 2023
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