New BERG Working Paper No. 185 by Fabio E.G. Röhrer, Christian Proaño und Lebogang Mateane published

In the BERG Working Paper Series 185 Fabio E.G. Röhrer, Christian Proaño und Lebogang Mateane has published a new paper entitled "The Impact of Macroeconomic Activity and Yield Valuation on Mergers and Acquisitions in Europe".

A complete overview of all BERG Working Papers published so far can be found here.



We examine the macroeconomic determinants of mergers and acquisitions (M&A) using panel data over 2006:Q1 - 2022:Q2 for 21 European Union (EU) countries. Across different model speciacations we and that bond yields and past real GDP growth are robust quantitatively and statistically signifcant determinants of M&A even after controlling for ináation and short-term global financial uncertainty. Additionally, we investigate the effect of the earnings before interest, taxes, depreciation and amortization multiple as an additional explanatory variable. A crucial novelty of our study is that bond yields reduce M&A activity because other investors are shifting their portfolios out of bonds and into riskier assets such as equities. We denote this as a "perverse valuation effect" making M&A more expensive. This interpretation and channel is unique to our study..