Abstract
This study applies a well-known approach for the analysis of investment projects to the investigation of cross-border mergers and acquisitions between Canadian and American firms in the period 1982-1990. The major purpose of the paper is to document the extent of the contribution of macroeconomic variables, such as exchange rates, bond yields, stock prices, and P/E ratios, to the recent trends in Canada-U.S. and U.S.- Canada cross-border acquisitions, as distinct from industry and firm-specific variables. The results suggest that the levels of the yields on long-term debt securities in both countries and their difference contribute significantly to an explanation of the difference of Canadian acquisitions of U.S. firms and American acquisition of Canadian firms in the period.
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