The effects of cross-border M&As on the acquirers' domestic performance: firm-level evidence

This paper provides empirical evidence on the effects of cross-border mergers and acquisitions (M&As) on the acquiring firms' domestic performance in the U.K. and France. We build a new firm-level data set that combines a global M&A database with balance sheet data for the years 2000 to 2007. Combining matching techniques with a difference-in-differences estimator, we find that cross-border M&As boost on average acquirers' domestic sales and investment, and they are not accompanied by a downsizing of the domestic labour force in either country. Further, cross-border M&As in knowledge-intensive industries lead to improvements in domestic productivity. Our results display some heterogeneity across industries and types of acquisitions, suggesting a connection between the motives for international M&As and their resulting effects.