Honey Remember to Pick Up the Kids and Take the Country-specific Factors into Account When Calculating the Deal Premium: An Investigation of Country-Specific Determinants of the Deal Premium in Cross-Border Mergers and Acquisitions from 1999 to 2019

Gustav Jakobsson & Erik Ã…kerlind

Student thesis: Master thesis

Abstract

The purpose of the thesis is to study if and how country-specific determinants in cross-border mergers and acquisitions (M&A) affect the size of the deal premium paid. By using deal premium as a dependent variable this thesis contributes with new insights into cross-country determinants and further adds to the analysis of international M&A. The determinants are tested using linear regression models based on a sample of 2,188 deals in 57 different target countries during the years 1999 to 2019. The authors find that numerous country-specific factors, related to social, political, macroeconomic, and institutional aspects, affect the deal premium both positively and negatively. By using the rationale of valuation theory, information asymmetry, and transaction costs economics the authors attempt to explain how the different country-specific factors affect the deal premium. This thesis addresses the largely inconclusive and contradictory results of prior research regarding how country-specific factors constitute important components in the estimation of joint synergies and target prices. The authors shed new light on if and how these country-specific factors influence the deal premium and add insight into the analysis of international M&As and corporate valuation.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages86