Abstract

This study includes economic policy uncertainty measures and the magnitude and frequency of Asia pacific multinational business Mergers and acquisitions in 11 countries from 2009 to 2019 to evaluate the impact of uncertainty in economic policies (E.P.U) of global organizations mergers and acquisitions (M&A). To demonstrate that uncertainty in the home nation’s economic policy significantly restricts multinational enterprise Mergers and acquisitions, uncertainty in the nation’s economic policy significantly enhances Mergers and acquisitions, and that when the economy is in a pro-cyclical phase, these effects are reduced. Furthermore, the economic crisis has different effects of the country’s uncertain economic policies on worldwide firm M&As. There is a significant negative correlation between the country’s economic policy uncertainty and multinational firm Merger and acquisitions. Third, multinational firm Mergers and acquisitions are significantly impacted by economic policy uncertainties in the ASEAN (Association of Southeast Asian Nations) but not much in emerging countries. The size of M&A is considerably positively connected with foreign market expansion and variations in uncertainties.

Introduction

Foreign direct investment (FDI) in ASEAN mostly involves investment and acquisitions and mergers of international corporations (M&As). And over half of Asian’s total OFDI in 2016 came from multinational firm M&A deals, exceeding financing strategy. Economic policies were in flux due to the European financial crisis, the American fiscal deficit, Political uncertainty, a tariff war between Asia pacific and the US, and other developments, which have increased economic and financial instability. The EPU Measure created by Khojasteh et al. (2018) shows that it was in a reasonably steady condition before the global economic crisis of 2008, and that it climbed significantly in the wake of the crisis. Many things happened during this period that significantly reduced the scope and intensity of international M&As globally, increasing dangers to the global economy and impeding foreign investment from other nations. Asian, which has the sec largest economy, also has been impacted, and its degree of general economic unpredictability is above the average for the globe. Hence, it is necessary and important to study on the risk and the synergy of multinational enterprise mergers and acquisitions under the background of the COVID-19 pandemic.

In this study, we examine if there is a correlation between EPU within the nations and the transnational corporation M&A. Data used from the Asia pacific EPU and multinational enterprise M&As. Its contribution to the literature is as follows. Tian et al. (2022) determine if their impacts change depending on the situation, which will assist Asian’s businesses in adjusting their investment philosophies in developing nation and has a rising economy. Therefore, it has many of the same problems with employment, economic growth, and sustainable growth as other developing nations. East Asia is becoming more interested in foreign investments, and Asian’s (Nanayakkara and Colombage, 2019) worldwide firm Mergers and acquisitions (economic and financial uncertainties significantly impact m&a (Fang et al., 2020)). The majority findings of the current research is based on wealthy nations.

Conclusion and policy implications

EPU’s influence on Asean enterprises’ multinational company M&As was statistically analyzed​ using cross-sectional data from 11 countries from 2009 to 2019. Asean’s EPU promotes firms to buy multinationals since the home country’s economic policy is uncertain. ASEAN firms may not be able to engage in cross-border mergers and acquisitions owing to the host country’s unclear economic policies and low EPU factor. ASEAN enterprises’ overseas M&A is driven by rising home country EPU and dropping host country EPU, which lowers the host country’s EPU in a pro-cyclical sector. It implies macroeconomic policies and internal organizational factors effect international corporate mergers and acquisitions. The purpose of M&As should be to enhance public understanding of a country’s fiscal policies, comprehend the dynamic character of its economic strategy, and alter foreign direct investment and financing choices in response to evolving economic priorities. Second, unlike the overall regression, the time-divided subsample suggests that the host country’s economic plan was unpredictably good before the global crisis. The overall decline supports the host nation’s less unpredictable economic approach since the global crisis. The relevance of each variable matches the overall regression in rich nations after segmenting the data by country type. The home country’s economic strategy’s uncertainty is positive, whereas the host country’s uncertainty is negative.