Mergers and acquisitions’ survival dynamics and the drivers of deal completion in emerging economies

Resumo

This study examines the duration of pre-acquisition processes in corporate mergers and acquisitions conducted by acquiring firms listed in emerging economies, as well as the determinants of their completion. Previous studies typically analyze deal duration and deal completion separately, often excluding unresolved transactions and relying on methods that are not designed for time-to-event data. Consequently, the determinants of acquisition survival and completion remain understudied, particularly in emerging economies. In emerging economies, institutional voids, information asymmetries, and higher transaction costs may increase the overall duration of negotiations and the likelihood of deal failure. Despite being a remarkable problem, studies dedicating special attention to the analysis of deal duration and completion are still scarce. Methodologically, this study integrates completed, pending, and abandoned transactions into the same analytical framework, overcoming recurring limitations of the empirical literature in corporate finance. Kaplan-Meier estimators were first employed to provide a descriptive assessment of merger and acquisition (M&A) duration patterns. Subsequently, survival analysis models were applied to estimate the hazard function of acquisition completion, treating abandoned and pending deals as censored data. The analysis is based on 15,376 M&A transactions announced by firms headquartered in nine emerging economies from 2002 to 2021. The results reveal negative duration dependence in M&A transactions, indicating that the probability of deal completion decreases as negotiations remain unresolved. Acquiring firms’ efficiencies, deal characteristics, macroeconomic conditions, and institutional quality significantly affect completion dynamics. The application of such framework also fosters new perspectives on the interpretation of theoretical relationships, encompassing the role of capital market development, broader pro-market institutions, and monetary conditions during the interim period, as well as deal characteristics, such as the role of structure (merger or acquisition) and deal regulation. The study contributes to the literature by applying survival analysis to jointly examine deal duration, completion, and abandonment, by providing an exploratory assessment of M&A duration data, and by offering evidence from a large multi-country sample of emerging economies. Thus, the results offer significant implications for decision-makers and academic literature.