Impact of Economic Determinants on the Scale Effect of Cross Border Merger and Acquisition: A Comparison between Developed and Emerging Economies

The main reason for the increase in cross-border mergers and acquisitions in developed and emerging countries is globalization and growing economic interdependence across countries. The state of the economy has a significant impact on whether cross-border mergers and acquisitions are encouraged or discouraged by international strategic capital market changes. This study empirically evaluates the influence of determinants of economic development on the scale effect of Cross Border M&As separately on emerging and developed nations as a research gap. We first separated the small and large scale firms based on companies’ worth and used panel regression to analyze the impact of GDP, employment rate, and market capitalization on cross-border merger & acquisition deals over the period of 2008-2018. Results indicate that GDP and market capitalization have a positive effect on CBM&A, whereas employment rate has a negative effect on CBM&A deals in large-scale firms of both emerging and developed countries. This study results offer the implication for the potential investors and policymakers to strategically analyze the implementation of cross-border mergers & acquisitions.