The Euro and its Impact on the Number, Size, Performance and Regional Spread of European Mergers and Acquisitions

McCarthy K. J. and Dolfsma W. The euro and its impact on the number, size, performance and regional spread of European mergers and acquisitions, Regional Studies. The macroeconomic effects of the euro have been extensively studied. The literature has, however, paid significantly less attention to the microeconomic consequences and few authors have considered if and how the euro has impacted firm-level decision-making. This paper explores if, how and in what way the euro has impacted one firm-level decision: whether to merge with or acquire another firm. This paper builds a sample of 19 362 acquisitions, announced in the period 1990-2014. It shows that the euro has dramatically increased the number, size and performance of European mergers and acquisitions. Importantly, it also notes that the euro has altered the geographic spread of European acquisitions. The paper reports that since the introduction of the euro, acquirers have made increasingly distant acquisitions and have preferred targets in peripheral regions to those in the core. The results also hint at the suggestion that the euro may have led acquirers to prefer Eurozone to non-Eurozone targets. From a policy perspective, it is concluded, therefore, that the euro has significantly impacted firm behaviour and has contributed, in a positive sense, to regional integration.