This paper studies the relation between state visits and cross-border merger and acquisition (M&A) activity. Based on 1161 state visits and 11,531 cross-border acquisitions, we find that corporations from visiting countries are more likely to acquire corporations in countries hosting the visit. Domestic acquisitions in the host country or M&As with non-visiting countries are not elevated. Evidence from instrumental variable analysis points towards a causal effect of state visits on M&A activity. Further analysis shows that the elevated M&A activity originating from visiting countries can be attributed to business networking and a reduction in investment uncertainty and cultural barriers.

Political state visits, Cross-border acquisitions, Cultural differences, Networking, Investment uncertainty
Corporate Finance and Governance: General (jel G30), Mergers; Acquisitions; Restructuring; Corporate Governance (jel G34), International Investment; Long-Term Capital Movements (jel F21)
hdl.handle.net/1765/132127
Journal of Corporate Finance
Department of Business Economics

Aleksanyan, M., Hao, Z., Vagenas-Nanos, E., & Verwijmeren, P. (2020). Do state visits affect cross-border mergers and acquisitions. Journal of Corporate Finance, Accepted. Retrieved from http://hdl.handle.net/1765/132127