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Terrorism, national security, and takeover performance

Author

Listed:
  • Ghufran, Bushra
  • Breuer, Wolfgang

Abstract

We investigate the potential impact of an acquiring country's situation regarding terrorism and security on an acquirer's long-term post-acquisition takeover performance. Through an extensive analysis of 30,401 M&A deals spanning 53 countries between 1990 and 2016, we provide substantial international evidence that the prevailing level of terrorism in the acquiring country significantly diminishes takeover gains over an extended period. On the other hand, acquirer security enhances long-term takeover performance. In addition, we find that religious fractionalization intensifies the negative impact of terrorism. Moreover, we observe that an acquiring country's terrorism and security situation have a much stronger influence on domestic mergers and on acquirers from less globalized economies, which tend to be less diverse and more severely affected by terrorism and security issues compared to acquirers involved in cross-border mergers and hailing from more globalized economies. Finally, while the market reacts quickly to an acquiring country's terrorism situation, the effects on relatively long-term business performance develop gradually.

Suggested Citation

  • Ghufran, Bushra & Breuer, Wolfgang, 2024. "Terrorism, national security, and takeover performance," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pb:s1057521924005660
    DOI: 10.1016/j.irfa.2024.103634
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    More about this item

    Keywords

    Mergers and acquisitions; Terrorism and national security; Globalization; Religious fractionalization; Takeover performance;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • F6 - International Economics - - Economic Impacts of Globalization
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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