Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7360224 | Journal of Economics and Business | 2018 | 44 Pages |
Abstract
Using a sample of 1263 European acquisitions over 2004-2012, we show that the performance of cross-border acquisitions is significantly affected by the Eurozone and the euro debt crisis. First, due to financial market integration and the elimination of exchange rate risk, intra-Eurozone acquisitions do not earn any abnormal returns for bidders. Second, as a result of the euro debt crisis and the temporary misvaluation among European countries, acquisitions earn positive abnormal returns only for non-Eurozone companies acquiring Eurozone targets. These abnormal returns are driven by the depreciation of the euro and the use of low-cost capital available to overvalued acquirers.
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Authors
Julie Ayton, Rekha Rao-Nicholson,