Abstract
We analyse why some merger and acquisitions (M&A) deals are withdrawn paying particular attention to the economic freedom and legal environment of countries. We use a large dataset based on deals worldwide from over 140 countries during the period 1977–2014. Our core finding is that the likelihood of a deal's withdrawal tends to increase if the economic freedom/quality of legal environment of the acquiring (target) firm's country is higher (lower). These core findings matter more for the non‐financial sector, during non‐crisis years, and in developed financial markets. We also report that the deals have higher tendency to be withdrawn if the target firm's size is larger or its profitability is lower; and the acquiring firm's size is smaller. Furthermore, our analyses reveal that deal characteristics (i.e., deal attitude, means of payment, deal size, ownership sought) also matter in affecting the outcome of announced M&A deals.
Original language | English |
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Pages (from-to) | (In-Press) |
Journal | International Journal of Finance and Economics |
Volume | (In-Press) |
Early online date | 5 Aug 2020 |
DOIs | |
Publication status | E-pub ahead of print - 5 Aug 2020 |
Externally published | Yes |
Keywords
- deal failure
- economic freedom
- firm size and profitability
- institutional environment
- mergers and acquisitions
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
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Profiles
-
Yilmaz Guney
- Faculty Research Centre for Financial & Corporate Integrity - Professor of Finance
Person: Teaching and Research