Forthcoming in AEJ: Macroeconomics: "Cross-Border Spillovers: How U.S. Monetary Conditions Affect M&As Around the World" by Katharina Bergant, Prachi Mishra, Raghuram Rajan, and Freddy Pinzon-Puerto.
www.aeaweb.org
(Forthcoming Article) - We study how U.S. monetary policy shocks transmit to cross-border
merger and acquisition (M&A) activity. Using country- and firmlevel
data, tighter U.S. policy is shown to reduce both the value and
the number of cross-border deals. The effects are especially pronounced
for acquirer firms with larger foreign-currency liabilities,
consistent with a net worth channel. Reflecting agency motives
for acquisitions, deals announced under more accommodative U.S.
conditions underperform ex post, indicating potential capital misallocation.
