Do home country stability factors matter for domestic and cross border mergers and acquisitions? A case of G19 countries

Abstract

This study explores the impact of home country stability factors (CSF)—political stability, corruption and governance—on mergers and acquisitions (M&A) volume and whether it differs between domestic and cross-border acquisitions. Domestic acquisition volume is mainly driven by low corruption and high governance, despite political instability. Increased governance boosts inbound acquisitions, followed by low corruption and greater political stability. Low corruption drives outbound acquisitions, followed by greater governance and political stability. The effect of CSF on propelling M&A volume varies by institutional setting. Low corruption is a unique factor that enhances a country's competitiveness in the pecking order of M&A.