Does Monetary Policy Affect Mergers and Acquisitions?

Konferenzbeitrag

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

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics

Classification and Topics

• Classification: Wirtschaft ; Financial Markets and the Macroeconomy ; Monetary Policy ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
• Subject: Monetary Policy ; Corporate Finance ; Mergers and Acquisitions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Horn, Carl-Wolfram ; Fischer, Johannes J.
• Event: Veröffentlichung
• (who): ZBW - Leibniz Information Centre for Economics
• (where): Kiel, Hamburg
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/242445
• Last update: 10.03.2025, 11:43 AM CET