Geopolitical risk and M&A: The role of national governance institutions

Sandeep Keshava Rao; Santosh Koirala; Sulaiman Aldhawyan; Shaen  Corbet

doi:10.1016/j.econlet.2023.111062

Geopolitical risk and M&A: The role of national governance institutions

Sandeep Keshava Rao^*, Santosh Koirala, Sulaiman Aldhawyan, Shaen Corbet

^*Corresponding author for this work

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Abstract

Examining nineteen emerging economies from 1990 to 2018, we identify a positive effect of geopolitical risk on mergers and acquisition (M&A) deal frequency, driven mainly by an increase in domestic M&A. However, we find a negative effect of geopolitical risk on the M&A deal size, highlighting the deadweight cost created by the geopolitical risk. The quality of national governance moderates the deterring effect of geopolitical risk.

Original language	English
Article number	111062
Number of pages	4
Journal	Economics Letters
Volume	225
Early online date	28 Feb 2023
DOIs	https://doi.org/10.1016/j.econlet.2023.111062
Publication status	Published - Apr 2023

Keywords

Geopolitical risk
Mergers and acquisitions
National institutions
Governance

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title = "Geopolitical risk and M&A: The role of national governance institutions",

abstract = "Examining nineteen emerging economies from 1990 to 2018, we identify a positive effect of geopolitical risk on mergers and acquisition (M&A) deal frequency, driven mainly by an increase in domestic M&A. However, we find a negative effect of geopolitical risk on the M&A deal size, highlighting the deadweight cost created by the geopolitical risk. The quality of national governance moderates the deterring effect of geopolitical risk.",

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AU - Rao, Sandeep Keshava

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AU - Aldhawyan, Sulaiman

AU - Corbet, Shaen

PY - 2023/4

Y1 - 2023/4

N2 - Examining nineteen emerging economies from 1990 to 2018, we identify a positive effect of geopolitical risk on mergers and acquisition (M&A) deal frequency, driven mainly by an increase in domestic M&A. However, we find a negative effect of geopolitical risk on the M&A deal size, highlighting the deadweight cost created by the geopolitical risk. The quality of national governance moderates the deterring effect of geopolitical risk.

AB - Examining nineteen emerging economies from 1990 to 2018, we identify a positive effect of geopolitical risk on mergers and acquisition (M&A) deal frequency, driven mainly by an increase in domestic M&A. However, we find a negative effect of geopolitical risk on the M&A deal size, highlighting the deadweight cost created by the geopolitical risk. The quality of national governance moderates the deterring effect of geopolitical risk.

KW - Geopolitical risk

KW - Mergers and acquisitions

KW - National institutions

KW - Governance

U2 - 10.1016/j.econlet.2023.111062

DO - 10.1016/j.econlet.2023.111062

M3 - Letter

SN - 0165-1765

VL - 225

JO - Economics Letters

JF - Economics Letters

M1 - 111062

ER -

Geopolitical risk and M&A: The role of national governance institutions

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Keywords

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