Beschreibung:
Using a sample of 101,834 cross-border deals announced between 1985 and 2018, we show that merger flows involve acquirers from more democratic countries than their targets. This result is primarily driven by a “pull” factor, that is, firms in countries with weaker democratic institutions attract cross-border deals. Democratic institutions have a fundamental influence on international merger activity because they are conducive to better corporate governance standards. Further decomposing the effect reveals that democratic institutions also play a direct role that is not due to investor protection or economic development. Our findings imply that democracy is an important, omitted determinant of cross-border mergers