Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/273385 
Year of Publication: 
2023
Series/Report no.: 
BERG Working Paper Series No. 185
Publisher: 
Bamberg University, Bamberg Economic Research Group (BERG), Bamberg
Abstract: 
We examine the macroeconomic determinants of mergers and acquisitions (M&A) using panel data over 2006:Q1 - 2022:Q2 for 21 European Union (EU) countries. Across di§erent model specifications we find that bond yields and past real GDP growth are robust quantitatively and statistically significant determinants of M&A even after controlling for inflation and short-term global financial uncertainty. Additionally, we investigate the effect of the earnings before interest, taxes, depreciation and amortization multiple as an additional explanatory variable. A crucial novelty of our study is that bond yields reduce M&A activity because other investors are shifting their portfolios out of bonds and into riskier assets such as equities. We denote this as a "perverse valuation effect" making M&A more expensive. This interpretation and channel is unique to our study.
Subjects: 
Mergers and Acquisitions
Financial markets
Macroeconomy
European Union
JEL: 
E00
E02
G15
G34
ISBN: 
978-3-949224-06-5
Document Type: 
Working Paper

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