Direct Flights and Cross-border M&A (With Ivan Kandilov and Mark Walker) (Job Market Paper) [Link:Link],forthcoming Journal of Corporate Finance Introduction of a direct flight between locations in different countries allows for faster travel and a lower cost of acquiring information, potentially facilitating acquisitions abroad. We evaluate this hypothesis by considering cross-border mergers and acquisitions (M&A) activity between China and the U.S. following China’s accession into the WTO. We find that the introduction of a direct flight between Chinese and U.S. locations leads to about 87 percent higher likelihood of an M&A deal. Further, our results suggest that the introduction of a direct flight is associated with about 1 new cross-border M&A transaction and about $12.6 million annual increase in M&A volume. These estimates are robust to different empirical specifications. We also demonstrate that reverse causality is unlikely to drive our results. Finally, we find that following the introduction of a direct flight, these deals with lower premium paid and higher probability of cash payment are met more positively by the market and acquirers' operating performance improves.
The Belt and Road Initiative and Chinese Cross-border M&A (With Ivan Kandilov and Mark Walker) [Link:Link],
The Belt and Road Initiative was introduced by President Xi in an attempt to further economic connections with partner countries and foster development within China. We examine the effect of the Initiative on Chinese cross-border M&As. We find that the Initiative significantly increases the probability and the transaction amount of M&A deals in target countries. Moreover, the market reacts more positively to these deals. We find that the effect is entirely driven by state-owned enterprises and it is more pronounced in firms that are located on the more-developed eastern coast of China. The evidence suggests that the announcement of the Belt and Road Initiative was followed by economically meaningful cross-border M&A in targeted countries.
Working Papers How Pandemics Affect International Investment: Evidence from M&As during SARS-CoV-1 in China(With Ivan Kandilov and Mark Walker)
Government Ideology Similarity and Cross-Border M&As(With Ivan Kandilov, Mark Walker and Xi Zhou)