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.

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Journal of Corporate Finance
Erasmus School of Economics

Aleksanyan, M. (Mark), Hao, Z. (Zhiwei), Vagenas-Nanos, E, & Verwijmeren, P. (2021). Do state visits affect cross-border mergers and acquisitions?. Journal of Corporate Finance, 66. doi:10.1016/j.jcorpfin.2020.101800