The impact of cross-border mergers on investment

Abstract

This article examines the empirical link between mergers and investment using a panel of 61 developed and developing countries between 1987 and 2001. The results indicate that, on average, a rise in cross-border merger and acquisition activity tends to reduce investment. However, in high-income countries, the number of mergers had a positive impact on investment. This finding could be due to stock market inefficiencies in these low- to middle-income countries.