Economic Determinants' Influence on the Scale Effect of Cross-Border Mergers and Acquisitions

A Comparative Study on Advanced and Developing Economies

Abstract

This research paper explores the influence of globalisation and increasing economic interdependence on Cross-border mergers and acquisitions (CBM&A) in established and developing markets. It investigates how the economic status of a country impacts the encouragement or discouragement of CBM&As due to international strategic capital market developments. Addressing a research gap, this study empirically assesses the effects of economic growth drivers on CBM&As in advanced and developing nations. By categorising into small and large organisations based on their worth, a panel regression model is employed to examine the influence of GDP, the Employment rate (EMP), Market capitalisation (MC), Net export (XM), and Inflation (I) on CBM&A agreements from January 2010 to December 2023. The findings indicate that GDP favours CBM&A agreements in large-scale organisations in advanced as well as developing countries. Additionally, market capitalisation positively impacts all aspects except small-scale firms in advanced nations. However, the employment rate, net exports, and Inflation exhibit unfavourable effects on CBM&As in both advanced and developing nations. These findings have significant implications for potential investors and governments seeking strategic insights into implementing CBM&As.