AffiliationUniv Arizona, Eller Coll Management
MetadataShow full item record
PublisherELSEVIER SCIENCE SA
CitationBonaime, A., Gulen, H., & Ion, M. (2018). Does policy uncertainty affect mergers and acquisitions?. Journal of Financial Economics, 129(3), 531-558. https://doi.org/10.1016/j.jfineco.2018.05.007
JournalJOURNAL OF FINANCIAL ECONOMICS
RightsPublished by Elsevier B.V.
Collection InformationThis item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at email@example.com.
AbstractPolitical and regulatory uncertainty is strongly negatively associated with merger and acquisition activity at the macro and firm levels. The strongest effects are for uncertainty regarding taxes, government spending, monetary and fiscal policies, and regulation. Consistent with a real options channel, the effect is exacerbated for less reversible deals and for firms whose product demand or stock returns exhibit greater sensitivity to policy uncertainty, but attenuated for deals that cannot be delayed due to competition and for deals that hedge firm-level risk. Contractual mechanisms (deal premiums, termination fees, MAC clauses) unanimously point to policy uncertainty increasing the target's negotiating power. Published by Elsevier B.V.
Note36 month embargo; published online: 16 May 2018
VersionFinal accepted manuscript