Listing Effect in Acquirer Returns and Economic Growth Uncertainty in the Target Country: The Case of Cross-border M&A from Emerging Economies

ABSTRACT

We empirically prove that the negative listing effect of mergers and acquisitions (M&A) is more pronounced in target countries with high gross domestic product (GDP) growth rate uncertainty than in countries without such uncertainty. We examine a sample of 343 non-financial firms that disclosed cross-border M&A between 2000 and 2019 in the Korea Exchange stock market and 49 countries where the target firms are located. We show that the listing effect caused by economic growth uncertainty in the target country is stronger for cross-border M&A during the global financial crisis or when the target firms are based in emerging countries.

KEYWORDS:

• Cross-border M&A
• GDP growth uncertainty
• listing effect
• financial crisis
• size effect

JEL:

• G15
• G30
• G34

Notes

1. The emerging countries are defined as those that do not belong to the Group of Seven (G7), which consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States – the seven largest economies in the world.

Additional information

Funding

This work was supported by the Inha University Research Grant. The authors appreciate the support by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF2016S1A5B5A0790241).