TY - JOUR AU - Erel,Isil AU - Liao,Rose C. AU - Weisbach,Michael S. TI - World Markets for Mergers and Acquisitions JF - National Bureau of Economic Research Working Paper Series VL - No. 15132 PY - 2009 Y2 - July 2009 UR - http://www.nber.org/papers/w15132 L1 - http://www.nber.org/papers/w15132.pdf N1 - Author contact info: Isil Erel Department of Finance Ohio State University 832 Fisher Hall 2100 Neil Avenue Columbus, OH 43210 Tel: 614-292-5174 E-Mail: erel@fisher.osu.edu Rose C. Liao Department of Finance and Economics Rutgers Business School 111 Washington Street Newark, NJ 07102 E-Mail: rliao@andromeda.rutgers.edu Michael Weisbach Department of Finance Fisher College of Business Ohio State University 2100 Neil Ave. Columbus, OH 43210 Tel: 614/292-3264 E-Mail: weisbach.2@osu.edu M2 - featured in NBER digest on 2009-10-01 AB - Despite the fact that one-third of worldwide mergers involve firms from different countries, the vast majority of the academic literature on mergers studies domestic mergers. What little has been written about cross-border mergers has focused on public firms, usually from the United States. Yet, the vast majority of cross-border mergers involve private firms that are not from the United States. We provide an analysis of a sample of 56,978 cross-border mergers occurring between 1990 and 2007. We first characterize the patterns of who buys whom: Geography matters, with firms being much more likely to purchase firms in nearby countries than in countries far away. Purchasers are usually but not always from developed countries and they tend to purchase firms in countries with lower investor protection and accounting standards. A significant factor in determining acquisition patterns is currency movements; firms tend to purchase firms from countries relative to which the acquirer’s currency has appreciated. In addition economy-wide factors reflected in the country’s stock market returns lead to acquisitions as well. Both the currency and stock market effect could reflect either misvaluation or wealth explanations. Our evidence is more consistent with the wealth explanation than the misvaluation explanation. ER -