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Fire-sale FDI during the European financial crisis
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Resumo(s)
Using data on mergers and acquisitions in the period 1999-2018 for 27 Eurozone countries, I
investigate the effects of the recent European financial crisis on the market for corporate
assets. The Eurozone presents itself as an arena for testing the fire-sale FDI hypothesis of
Krugman (2000). I test the two main implications of the hypothesis which are that the number
of M&A deals should increase for the crisis-stricken countries during a crisis. Furthermore,
that these deals should see lower prices compared to the rest of the Eurozone. The results
indicate that the number of transactions involving the crisis countries do not increase during
the crisis, which do not support the fire-sale FDI hypothesis. Moreover, the premiums paid for
targets in the crisis countries are lower than the rest of the Eurozone, but this effect persists
over the entire period and not only the crisis period.
Descrição
Palavras-chave
Cross-border M&A Fire-sale FDI hypothesis Financial crises Foreign direct investment