Cross-border mergers and acquisitions: the European–US experience

Abstract

Our study, utilizing logit and multiple regression models, tests the hypothesis that macroeconomic variables, in particular bond yields, exchange rates, and stock prices, influenced the number and direction of cross-border acquisitions between firms in the United States and each of four European countries: Germany, Italy, the United Kingdom, and France. While the logit model results suggest that bond yields explain the trends in cross-border acquisitions, the regression results show the US stock prices to be a good explanatory variable. In general, the results suggest that foreign acquisitions occur more frequently when bond yields in the acquirer's country are higher than those from the country of the firm being acquired. In addition, a depressed US stock market relative to foreign stock markets encourages foreign acquisition of US companies.