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The effect of firm-specific capital structure and macro-economic variables on merger and acquisition likelihood in a Latin American and a European cultural cluster

Guerre, Marie Louise Andrée LU and Kittler, Kathrin (2012) BUSN88 20121
Department of Business Administration
Abstract
The purpose of this research paper is to analyze the change in the likelihood of M&A activity (dependent variable) in a European and a Latin American cluster due to changes in independent variables,demonstrating the ability of macroeconomic (GDP per capita, exchange rate, and commodity price) and firm-specific factors (Leverage ratio, cash reserve ratio, and company size) to influence business activities.
The paper looks at several papers, which study variables framework: affecting M&A likelihood, the cultural difference between the European and Latin American cluster, and the oil and gas industry.

The oil and gas industry is an active M&A market as several waves have been registered in the last decade (consolidation, privatization,... (More)
The purpose of this research paper is to analyze the change in the likelihood of M&A activity (dependent variable) in a European and a Latin American cluster due to changes in independent variables,demonstrating the ability of macroeconomic (GDP per capita, exchange rate, and commodity price) and firm-specific factors (Leverage ratio, cash reserve ratio, and company size) to influence business activities.
The paper looks at several papers, which study variables framework: affecting M&A likelihood, the cultural difference between the European and Latin American cluster, and the oil and gas industry.

The oil and gas industry is an active M&A market as several waves have been registered in the last decade (consolidation, privatization, re-nationalization). The European and the Latin American clusters, show signs of dissimilarity and thus, M&A likelihood is not affected by the same variables in these two clusters. Leverage ratio is negatively correlated and significant in the Latin American cluster, whereas it is significant and positively correlated in the European cluster. Moreover, the control variable company size is significant and positively related to M&A likelihood in both clusters. However, cash reserve shows significance at high confidence levels in the European cluster with a positive correlation, whereas it is insignificant in the Latin American cluster. (Less)
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author
Guerre, Marie Louise Andrée LU and Kittler, Kathrin
supervisor
organization
course
BUSN88 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Mergers and Acquisitions, European cluster, Latin American cluster, Oil and gas industry, M&A likelihood, Exogenous variables, firm-specific variables, GDP per capita, Exchange rate, Commodity price, Leverage, Cash reserve, Company size
language
English
id
2688537
date added to LUP
2012-06-25 15:05:21
date last changed
2012-06-25 15:05:21
@misc{2688537,
  abstract     = {The purpose of this research paper is to analyze the change in the likelihood of M&A activity (dependent variable) in a European and a Latin American cluster due to changes in independent variables,demonstrating the ability of macroeconomic (GDP per capita, exchange rate, and commodity price) and firm-specific factors (Leverage ratio, cash reserve ratio, and company size) to influence business activities.
The paper looks at several papers, which study variables framework:	affecting M&A likelihood, the cultural difference between the European and Latin American cluster, and the oil and gas industry.

The oil and gas industry is an active M&A market as several waves have been registered in the last decade (consolidation, privatization, re-nationalization). The European and the Latin American clusters, show signs of dissimilarity and thus, M&A likelihood is not affected by the same variables in these two clusters. Leverage ratio is negatively correlated and significant in the Latin American cluster, whereas it is significant and positively correlated in the European 					cluster. Moreover, the control variable company size is significant and positively related to M&A likelihood in both clusters. However, cash reserve shows significance at high confidence levels in the European cluster with a positive correlation, whereas it is insignificant in the Latin American cluster.},
  author       = {Guerre, Marie Louise Andrée and Kittler, Kathrin},
  keyword      = {Mergers and Acquisitions,European cluster,Latin American cluster,Oil and gas industry,M&A likelihood,Exogenous variables,firm-specific variables,GDP per capita,Exchange rate,Commodity price,Leverage,Cash reserve,Company size},
  language     = {eng},
  note         = {Student Paper},
  title        = {The effect of firm-specific capital structure and macro-economic variables on merger and acquisition likelihood in a Latin American and a European cultural cluster},
  year         = {2012},
}