Abstract
This study examines the impact of local political corruption on investors evaluation of firms mergers and acquisitions (M&As) in the US. Using thenumber of corruption convictions of government officials reported by the US Department of Justice, we find that acquirers in more corrupt court districts experience lower acquirer announcement returns, lower combined acquirer and
target announcement returns, and are less likely to complete acquisitions. We further find that the relation between local political corruption and acquirer
announcement returns is worsened when acquirers operate primarily in the headquarters state. Overall, the results suggest that local political corruption has an adverse impact on investors' evaluation of a firm's M&A profitability
Original language | English |
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Pages (from-to) | 885-912 |
Journal | Accounting and Finance |
Volume | 61 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2021 |