The impact of monetary policy on M&A outcomes

Samer Adra, Leonidas Barbopoulos, Anthony Saunders

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)
135 Downloads (Pure)


Monetary policy influences a wide range of Mergers and Acquisitions (M&A) outcomes. First, an increase in the federal funds rate predicts a negative market reaction to M&A announcements, an increase in the likelihood of deal withdrawal, and significant financing challenges for the acquirer in the post-acquisition phase. Second, M&As announced during periods of high monetary policy uncertainty are associated with significant declines in acquirer value. This negative market reaction reflects a unique discount to compensate for the high riskiness of M&As in an uncertain monetary environment. Finally, we show that monetary contraction, rather than monetary policy uncertainty, is a key contributor to the decline in aggregate M&A activity.
Original languageEnglish
Article number101529
Number of pages27
JournalJournal of Corporate Finance
Early online date31 Oct 2019
Publication statusPublished - Jun 2020


  • federal funds rate
  • expected financing cost
  • monetary policy uncertainty
  • real options
  • mergers and acquisitions (M&As)
  • acquirer abnormal returns
  • M&A completions


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