Work

Mergers and Acquisitions and Brexit: A Natural Experiment

Year: 2022

Type: article

Abstract: ABSTRACT We study the impact of Brexit uncertainty on one of the most important forms of corporate investment: mergers and acquisitions (M&As). Brexit provides us with an ideal natural experiment to explore the real effects of economic uncertainty and understand the underlying transmission mechanism. We document a significant decline in the number of M&A deals for UK firms after Brexit compared to EU firms. This inhibiting effect is amplified by the channels of real options, foreign trade, and financial constraints. Overall, our results provide for deeper understanding of this unprecedented uncertainty in Brexit policy on local M&A activity. Policy makers are urged to respond.

Source: International Journal of Finance & Economics

DOI: 10.1002/ijfe.70031

Authors: Di Luo, Tapas Mishra, Mamata Parhi, Zhuang Zhang

Institutions: University of Dundee, University of Southampton, University of Roehampton

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,000

Funders: California Consumer Protection Foundation, National Natural Science Foundation of China