Abstract:
Most of the growth in international production over the past decade has been carried out via
cross-border mergers and acquisitions. Yet previous empirical work relating to CBM&As has
been confined to firm-specific factors. This is against the backdrop that researchers have not been
able to develop a coherent theory explaining the increasing trends of CBM&As activity. Building
on prior studies, this study attempts to extend the few existing studies by using a simple empirical
nonlinear framework to analyse the number of cross-border mergers and acquisitions inflows
between 1987 and 2008 into the UK from a macroeconomic perspective. The main findings are
that the response of the inflow is asymmetric as there is more persistence during stock market
booms versus recessions. There are asymmetries with respect to relative prices suggesting that
merger inflow activity appears to be higher once the stock prices rise above a threshold level of
8% . Other factors which have significant bearing on CBM&As inflows are the rate of inflation
and growth in real GDP.
