Do cross-border stock exchange consolidations affect cross-border M&A? : a study of cross-border stock exchange consolidations’ effect on merger volumes and payment methods

Abstract

Since the early 2000s, there has been a trend of stock exchanges consolidating across borders with Euronext and Nasdaq being the most prominent examples. We analyse the effect crossborder stock exchange consolidation has on cross-border M&A using a sample of 61,834 cross-border mergers between 1994 and 2017. We find a small decrease in the number of deals between public companies, but do not discover any effect on the average deal size. In addition, we show that transactions with a public acquirer tend to use less stock as consideration poststock exchange consolidation, which forms an argument that consolidated stock exchanges cause M&A to be perceived as less risky, as stock has inherent risk-sharing properties. Keywords: Cross-border M&A, stock exchange consolidation, payment method