Unveiling the role of political and legal frameworks on M&A dynamics

Abstract

This study investigates the impact of political and legal environments on Merger and Acquisition (M&A) activities across 26 countries over a 22-year period. Utilising a fixed effects panel data approach, the research incorporates Principal Component Analysis (PCA) to construct composite measures of governance, judicial independence, and property rights. M&A activity, measured both by the number of deals and the total value of deals, is found to be significantly enhanced by solid political and legal frameworks, while high bureaucratic costs and tax burdens deter it. Robustness tests, including the exclusion of US deals, analysis of emerging markets, and lagged models, confirm the consistency of these results. This study uniquely contributes to the literature by employing non-standard proxies and providing nuanced insights into the global M&A landscape, offering a comprehensive understanding of the role played by the institutional and macroeconomic determinants of M&A transactions.

Date of Award	26 Jun 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José D. Garcia Revelo (Supervisor)