Factors Affecting International Mergers and Acquisitions

The purpose of this paper is to investigate the factors that explain outward and inward merger and acquisition (M/A) activity for a country. The variables used to explain M/A activity include the exchange rate, interest rate, and stock market prices. Regression analysis is used to isolate and clarify the effects of these three factors for aggregate M/A activity and M/A activity within the food, beverage, and tobacco industry. The analysis shows that three variables, the exchange rate, interest rate, and stock prices, are quite important in explaining variations in M/A activity by country. Exchange rate changes in particular have a very elastic impact on outward M/A activity, indicating that price effects are important in determining outward investment flows. The stock market index positively influenced inward and outward M/A activity. The interest rate had a negative impact on M/A in the inward and outward M/A models with M/A outflows decreasing by about the same percentage that interest rates increase.

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International Food and Agribusiness Management Review, 06, 4
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 Record created 2017-04-01, last modified 2018-11-28

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