Economic policy uncertainty and mergers and acquisitions : an empirical study on European firms

The aim of this thesis is to investigate the relationship between EPU and M&A likelihood in Europe. More specifically, the relationship between EPU and domestic, cross-border and intra-EU M&A is investigated. This study has found results that for United Kingdom and Sweden EPU has a significant negative effect on domestic M&A likelihood. The results of this study show a negative effect on inbound acquisition likelihood. For outbound acquisition likelihood, the results showed a robust negative effect. Next to this, EPU showed to have a negative effect on the number of intra-EU acquisitions. It can also be concluded that EU firms reduce the amount of acquisition to the eastern part when EPU rises. All these results are expected to be driven by the real option theory. This means that firms in these countries are more likely to delay with their M&A decision making process, in order to wait until the uncertainty is to some extent over.