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Erschienen in:

30.06.2021

The impact of policy uncertainty on the M&A exit of startup firms

verfasst von: Carmen Cotei, Joseph Farhat, Indu Khurana

Erschienen in: Journal of Economics and Finance | Ausgabe 1/2022

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Abstract

This paper examines how economic policy uncertainty impacts the likelihood of mergers and acquisitions as an exit route for startups. Our results show that an increase in policy uncertainty reduces the likelihood of mergers and acquisitions in startups. We argue that EPU negatively impacts the likelihood of M&A activity by increasing both the risk premium for the target firms and the cost of developing the absorptive capacity for the acquirer firm. However, startups that can build competitive advantage and can demonstrate innovative capabilities through the presence of intellectual property are more likely to exit via merger and acquisition, even in high policy uncertainty. Our results are robust after controlling for macro-level indicators and other model specifications. The study contributes to the growing literature that examines the impact of policy uncertainty on various aspects related to businesses in general and startups in particular.

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Metadaten
Titel
The impact of policy uncertainty on the M&A exit of startup firms
verfasst von
Carmen Cotei
Joseph Farhat
Indu Khurana
Publikationsdatum
30.06.2021
Verlag
Springer US
Erschienen in
Journal of Economics and Finance / Ausgabe 1/2022
Print ISSN: 1055-0925
Elektronische ISSN: 1938-9744
DOI
https://doi.org/10.1007/s12197-021-09553-9

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