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Cross-border arbitrage and acquirers’ returns in the Eurozone crisis

Lookup NU author(s): Dr Rekha Nicholson



This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND).


© 2017 Elsevier Inc. Using a sample of 1263 European acquisitions over 2004-2012, we show that the performance of cross-border acquisitions is significantly affected by the Eurozone and the euro debt crisis. First, due to financial market integration and the elimination of exchange rate risk, intra-Eurozone acquisitions do not earn any abnormal returns for bidders. Second, as a result of the euro debt crisis and the temporary misvaluation among European countries, acquisitions earn positive abnormal returns only for non-Eurozone companies acquiring Eurozone targets. These abnormal returns are driven by the depreciation of the euro and the use of low-cost capital available to overvalued acquirers.

Publication metadata

Author(s): Ayton J, Rao-Nicholson R

Publication type: Article

Publication status: Published

Journal: Journal of Economics and Business

Year: 2018

Volume: 95

Pages: 87-102

Print publication date: 01/01/2018

Online publication date: 04/06/2017

Acceptance date: 29/05/2017

Date deposited: 04/08/2017

ISSN (print): 0148-6195

Publisher: Elsevier


DOI: 10.1016/j.jeconbus.2017.05.001


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