Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/242445 
Year of Publication: 
2021
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
We analyse the effects of monetary policy on mergers and acquisitions (M&A) activity in the United States, both on the aggregate and the firm level. We find that aggregate M&A activity decreases significantly following a monetary policy shock. The aggregate results are confirmed by an analysis of the firm-level M&A activity from the perspective of the acquiring firm. We find that the likelihood of becoming an acquiror decreases significantly following a contractionary monetary policy shock. We find that the acquisition likelihood falls significantly more for relatively more financially constrained firms, suggesting a strong role for the credit channel in the transmission of monetary policy to firms' M&A decisions. We rationalize our empirical findings in a stylized partial-equilibrium model of the firm's M&A decision
Subjects: 
Monetary Policy
Corporate Finance
Mergers and Acquisitions
JEL: 
E44
E52
G34
Document Type: 
Conference Paper

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