Efficiency of Cross-Border M&A in Russia

The paper investigates growth implications of cross border acquisitions in Russia. The matter of research has not been covered in previous literature, however Russian authors studied the casual relationship between foreign direct investment and domestic companies’ productivities but not with economic growth. The study utilizes more than two thousand M&A deal with a Russian company as a target and an international acquirer which are further transformed into quarterly growth rates series and quarterly macroeconomic data for the 2002 – 2017 time period. According to the results, effect of cross border mergers on growth is dichotomous – significant and robust negative effect on growth from non-offshore deals with a control stake and potentially positive from a minority stake. Hypothesis about lesser extent of offshore deals growth efficiency is not rejected as well as the one about a crowding-out effect of domestic investment by non-offshore cross border acquisitions. However offshore acquisitions show some complementary dynamics with domestic investment, thus indicating of its affiliated nature with Russian companies’ investment activities. In compliance with previous papers, the negative effect is probably associated with a low development level of government institutes that cast limitations on an efficient integration of received funds, technologies and corporate governance synergies.