Mergers and acquisitions and Brexit: a natural experiment
Mergers and acquisitions and Brexit: a natural experiment
We study the impact of Brexit uncertainty on one of the most important forms of corporate investment: mergers and acquisitions (M&As). Brexit provides us with an ideal natural experiment to explore the real effects of economic uncertainty and understand the underlying transmission mechanism. We document a significant decline in the number of M&A deals for UK firms after Brexit compared to EU firms. This inhibiting effect is amplified by the channels of real options, foreign trade, and financial constraints. Overall, our results provide for deeper understanding of this unprecedented uncertainty in Brexit policy on local M&A activity. Policy makers are urged to respond.
Luo, Di
d6e61fed-fc5d-4aaf-a742-8e957344ee6d
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Parhi, Mamata
5e489f1d-9fe0-44b3-8027-bfa3ec6bfbd4
Zhang, Zhuang
df7b9fa8-04fd-4085-b74d-c9c1506b974e
9 August 2025
Luo, Di
d6e61fed-fc5d-4aaf-a742-8e957344ee6d
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Parhi, Mamata
5e489f1d-9fe0-44b3-8027-bfa3ec6bfbd4
Zhang, Zhuang
df7b9fa8-04fd-4085-b74d-c9c1506b974e
Luo, Di, Mishra, Tapas, Parhi, Mamata and Zhang, Zhuang
(2025)
Mergers and acquisitions and Brexit: a natural experiment.
International Journal of Finance & Economics.
(doi:10.1002/ijfe.70031).
Abstract
We study the impact of Brexit uncertainty on one of the most important forms of corporate investment: mergers and acquisitions (M&As). Brexit provides us with an ideal natural experiment to explore the real effects of economic uncertainty and understand the underlying transmission mechanism. We document a significant decline in the number of M&A deals for UK firms after Brexit compared to EU firms. This inhibiting effect is amplified by the channels of real options, foreign trade, and financial constraints. Overall, our results provide for deeper understanding of this unprecedented uncertainty in Brexit policy on local M&A activity. Policy makers are urged to respond.
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BrexitM&A20250412NoAuthor
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Int J Fin Econ - 2025 - Luo - Mergers and Acquisitions and Brexit A Natural Experiment
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Accepted/In Press date: 29 July 2025
Published date: 9 August 2025
Identifiers
Local EPrints ID: 507237
URI: http://eprints.soton.ac.uk/id/eprint/507237
ISSN: 1076-9307
PURE UUID: cf9760d1-6cc0-4d55-91e3-8645464c87d6
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Date deposited: 02 Dec 2025 18:00
Last modified: 03 Dec 2025 02:51
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Author:
Di Luo
Author:
Mamata Parhi
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