Acquirers and Financial Constraints : Theory and Evidence from Emerging Markets

How do financial crises shape the market for corporate control, by changing the set of acquirers, how much they acquire, and how long they keep ownership? To address these questions, we develop a tractable model of M&As where acquirers and targets emerge endogenously due to differences in liquidity. Financial crises induce selection effects among acquirers, resulting in larger acquired stakes and more persistent ownership. We present evidence consistent with the model's predictions using a dataset of domestic and cross-border M&As in emerging markets. Domestic firms in crisis-hit countries acquire 11-15% more ownership during crises. Their divestiture rates are 19-24% lower