Why do some merger and acquisitions deals fail? A global perspective

Rexford  Attah-Boakye; Yilmaz Guney; Elvis  Hernandez-Perdomo; Johnathan Mun

doi:10.1002/ijfe.2039

Why do some merger and acquisitions deals fail? A global perspective

Rexford Attah-Boakye, Yilmaz Guney, Elvis Hernandez-Perdomo, Johnathan Mun

Research output: Contribution to journal › Article › peer-review

4 Citations (Scopus)

3 Downloads (Pure)

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We analyse why some merger and acquisitions (M&A) deals are withdrawn paying particular attention to the economic freedom and legal environment of countries.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 We also report that the deals have higher tendency to be withdrawn if the target firm's size is larger or its profitability is lower; and the acquiring firm's size is smaller.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
Pages (from-to)	4734-4776
Number of pages	43
Journal	International Journal of Finance and Economics
Volume	26
Issue number	3
Early online date	5 Aug 2020
DOIs	https://doi.org/10.1002/ijfe.2039
Publication status	Published - Jul 2021
Externally published	Yes

Bibliographical note

This is the peer reviewed version of the following article: Attah-Boakye, R, Guney, Y, Hernandez-Perdomo, E & Mun, J 2021, 'Why do some merger and acquisitions deals fail? A global perspective', International Journal of Finance and Economics, vol. 26, no. 3, pp. 4734-4776, which has been published in final form at 10.1002/ijfe.2039 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

Keywords

deal failure
economic freedom
firm size and profitability
institutional environment
mergers and acquisitions

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

Access to Document

10.1002/ijfe.2039

Post-PrintAccepted author manuscript, 703 KB

Cite this

@article{34a1fd84739c4e88ad409ea6cbe5d3aa,

title = "Why do some merger and acquisitions deals fail? A global perspective",

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.",

keywords = "deal failure, economic freedom, firm size and profitability, institutional environment, mergers and acquisitions",

author = "Rexford Attah-Boakye and Yilmaz Guney and Elvis Hernandez-Perdomo and Johnathan Mun",

note = "This is the peer reviewed version of the following article: Attah-Boakye, R, Guney, Y, Hernandez-Perdomo, E & Mun, J 2021, 'Why do some merger and acquisitions deals fail? A global perspective', International Journal of Finance and Economics, vol. 26, no. 3, pp. 4734-4776, which has been published in final form at 10.1002/ijfe.2039 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley{\textquoteright}s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.",

year = "2021",

month = jul,

doi = "10.1002/ijfe.2039",

language = "English",

volume = "26",

pages = "4734--4776",

journal = "International Journal of Finance and Economics",

issn = "1076-9307",

publisher = "Wiley",

number = "3",

}

TY - JOUR

T1 - Why do some merger and acquisitions deals fail? A global perspective

AU - Attah-Boakye, Rexford

AU - Guney, Yilmaz

AU - Hernandez-Perdomo, Elvis

AU - Mun, Johnathan

N1 - This is the peer reviewed version of the following article: Attah-Boakye, R, Guney, Y, Hernandez-Perdomo, E & Mun, J 2021, 'Why do some merger and acquisitions deals fail? A global perspective', International Journal of Finance and Economics, vol. 26, no. 3, pp. 4734-4776, which has been published in final form at 10.1002/ijfe.2039 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

PY - 2021/7

Y1 - 2021/7

N2 - 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.

AB - 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.

KW - deal failure

KW - economic freedom

KW - firm size and profitability

KW - institutional environment

KW - mergers and acquisitions

UR - http://www.scopus.com/inward/record.url?scp=85088962986&partnerID=8YFLogxK

U2 - 10.1002/ijfe.2039

DO - 10.1002/ijfe.2039

M3 - Article

VL - 26

SP - 4734

EP - 4776

JO - International Journal of Finance and Economics

JF - International Journal of Finance and Economics

SN - 1076-9307

IS - 3

ER -

Why do some merger and acquisitions deals fail? A global perspective

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Yilmaz Guney

Cite this

Why do some merger and acquisitions deals fail? A global perspective

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Profiles

Yilmaz Guney

Cite this