The Interaction of Fire-Sales and USD Depreciation on Acquisition Premiums in Cross-Border M&A of U.S. Firms

Sammanfattning

This study examines whether USD depreciation amplifies the fire-sale effect on acquisition premiums in cross-border acquisitions of U.S. firms. Data was gathered from London Stock Exchange Group (LSEG) and the sample consists of 549 complete transactions ranging from 1992 to 2026, analyzed using an OLS regression. Financial distress is identified based on five criteria, following the methodology established by Ang & Mauck (2011). The USD depreciation is defined as a decline of more than 10% against the acquirer's currency in the six months prior to the announcement. The results show that the interaction between fire-sale conditions and USD depreciation significantly reduces acquisition premiums at the 10% baseline level, leading to rejection of the null hypothesis. The robustness check confirms this, with the interaction term remaining significant at the 10% level at the baseline threshold and becoming stronger at the 15% threshold. These findings challenge the Efficient Market Hypothesis in the short run, suggesting that foreign acquirers can capitalize on enhanced purchasing power when firm-level distress and macroeconomic shocks interact.