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Do state visits affect cross-border mergers and acquisitions?

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  • Aleksanyan, Mark
  • Hao, Zhiwei
  • Vagenas-Nanos, Evangelos
  • Verwijmeren, Patrick

Abstract

This paper studies the relation between state visits and cross-border merger and acquisition (M&A) activity. Based on 1161 state visits and 11,531 cross-border acquisitions, we find that corporations from visiting countries are more likely to acquire corporations in countries hosting the visit. Domestic acquisitions in the host country or M&As with non-visiting countries are not elevated. Evidence from instrumental variable analysis points towards a causal effect of state visits on M&A activity. Further analysis shows that the elevated M&A activity originating from visiting countries can be attributed to business networking and a reduction in investment uncertainty and cultural barriers.

Suggested Citation

  • Aleksanyan, Mark & Hao, Zhiwei & Vagenas-Nanos, Evangelos & Verwijmeren, Patrick, 2021. "Do state visits affect cross-border mergers and acquisitions?," Journal of Corporate Finance, Elsevier, vol. 66(C).
  • Handle: RePEc:eee:corfin:v:66:y:2021:i:c:s0929119920302443
    DOI: 10.1016/j.jcorpfin.2020.101800
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    3. Ambrocio, Gene & Gu, Xian & Hasan, Iftekhar, 2022. "Political ties and raising capital in global markets: Evidence from Yankee bonds," Journal of Corporate Finance, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Political state visits; Cross-border acquisitions; Cultural differences; Networking; Investment uncertainty;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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