Comparisons of acquisitions in the U.S., Europe and Asia before the Asian economic crisis

Abstract

It has been noticed that merger and acquisitions (M&A) are one of the most interesting issues in research. In the history of M&A, global merger and acquisitions activities have increased dramatically during the 90s. In 1998, global merger and acquisitions transactions reached the record $1 trillion level - reaching a staggering $133 trillion. However, little was known about how the increase in global acquisitions during the 90s would spread out through all major regions of the world. Also, whether the Asian economic crisis would either encourage or discourage M&A activities was unclear. There were two possible streams that could be examined. The first stream was to observe acquisition activities of multinational firms in major regions before the Asian crisis (before 1997), and the second stream was to observe their acquisition activities after the crisis (after 1997). The first stream is the scope of this study. The study found that U.S. multinational firms exercised most of their M&A activities in their own region. The evidence shows the same result for British, German and French firms. This study shows that European multinational firms executed their M&A investments mostly in Europe. However, Japanese multinational firms made their M&A investments in the United States. This paper suggests that geography, location advantage, government policy, firm nationality, and type of industry might affect the investment behaviours of U.S., European and Japanese firms. Discussion and future research are presented in the paper.