Abstract
In this paper we investigate the impact of institutional ownership on UK mergers and acquisitions. We employ a comprehensive sample of M&As conducted by UK acquirers from 2000 to 2010, thus including a full cycle of peak and trough in M&A waves. We find that institutional investors increase the likelihood of an M&A to be a large, cross-border deal, opting for full control. Moreover, institutional ownership concentration and foreign institutional ownership increase the likelihood of cross-border M&As. In addition, we assess the influence of institutional shareholders’ investment horizon and find that while investment horizon have a negative influence in encouraging cross-border M&As, the presence of long-term investors encourages larger M&As. Finally, even after controlling for the 2007-08 financial crisis the market reacts negatively to the announcement of cross-border M&As.
| Original language | English |
|---|---|
| Pages (from-to) | 547-561 |
| Number of pages | 15 |
| Journal | Journal of Banking and Finance |
| Volume | 50 |
| Early online date | 13 Jun 2014 |
| DOIs | |
| Publication status | Published - 31 Jan 2015 |
Keywords
- institutional investors
- mergers and acquisitions
- cross-border
- investment horizon
- endogeneity
- financial crisis
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