The Effect of Target-Country Institutions on Cross-Border Merger and Acquisition Activity: A Quantitative Literature Survey

In this paper, we synthesize and compare 2,961 estimates extracted from 90 papers on the effect of target-country institutions on cross-border merger and acquisition (CBMA) intensity and premia. The synthesis results show statistically significant effects of institutional quality, cultural similarity, corruption control, and political stability and effectiveness on CBMA activity, although the economic significance of these effects is modest. Study characteristics such as the choice of target and acquiring countries, estimation techniques, and sample selection strongly influence the effect estimates. Moreover, we examine the literature for the possible influence of publication-selection bias on the estimated effects and conclude that the presence of such bias calls into question whether the literature reports the true effects of institutions on CBMA activity. The results presented in our quantitative literature review suggest further research efforts to identify the true effect size.