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.
Author(s): Ayton J, Rao-Nicholson R
Publication type: Article
Publication status: Published
Journal: Journal of Economics and Business
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
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