Uncertainty Spillovers and Share of Equity Sought in Outbound Cross-Border Acquisitions

Abstract

ABSTRACT This study examines how uncertainty spillovers from G7 countries and China affect the share of equity in outbound cross-border acquisitions from 1996 to 2020. We show that higher uncertainty spillovers from the G7 and China significantly decrease the share of equity sought in outbound cross-border acquisitions. The effect becomes stronger when the target countries are emerging economies and have low institutional quality. Finally, the negative relationship between uncertainty spillovers and the share of equity sought remains statistically significant across a wide range of robustness tests namely, adding more control variables, subsample analysis and alternative estimation methods.