Overseas M & A under Economic Policy Uncertainty <br/>—An Empirical Study Based on Overseas M & A in the United States

Abstract

Past studies have shown that overseas mergers and acquisitions, whether developed or developing countries, are usually affected by natural resources, strategic resources, market search, institutional quality, business environment and so on. In addition, American economic and environmental policies often take the initiative to change, thus affecting the world’s other economies. On December 2016, global biggest economic policy uncertainty is the election of USA President Donald Trump. The effects of it to liberalized trade and global capital flows on the world are spreading. From this, it enlightens the empirical exploration of this paper: whether usepu (which means the uncertainty of the economic policy of the US) will affect the behavior of USA cross-border M & A and how it will affect the influence of cross-border M & A. Based on panel data from the United States of America for overseas mergers and acquisitions in 22 countries, including China, Britain, Germany and Japan, from 1997 to 2016, it is concluded that: First, every 1% change of the economic policy uncertainty index of the last period relative to the mean value will cause the reverse change of the next M & A amount by about 0.7%; For every 1 unit increase in the uncertainty index of home country’s economic policies in the last period, the number of outbound mergers and acquisitions decreased by about 0.5. Second, There is no obvious relationship between the foreign M & A amount of the home country and epu (which means the economic policy uncertainty), epu1 (which means the uncertainty difference between the two countries) and epu2 (which means the absolute value of the uncertainty difference between the two countries). There is an inverse relationship between the number of mergers and acquisitions and the uncertainty difference.