Determinants of M&A Activity with Participation of Russian Firms

The object of the research is mergers and acquisitions where Russian companies are the acquirers. The subject of the research is the impact of the target countries characteristics on the choice of foreign company by Russian companies in M&A transactions in the period from 2000 to 2017. The purpose of the work is to identify the determinants of the choice of a foreign target company in cross-border M&A transactions initiated by Russian companies. The work attempts to determine what conditions and characteristics of a foreign country are favorable for Russian companies to acquire companies from this country through M&A transactions. Our sample contains 21,008 observations of M&A transactions initiated by Russian companies, includes both domestic and cross-border transactions with 101 different country targets. We came to the conclusion that Russian companies do not focus on the level of financial development and openness of international trade of the target country when choosing a foreign company. At the same time, Russian acquirers are attracted by companies from a country with a low level of economic development and a stable economy. In addition, when choosing a foreign country, Russian acquiring companies are guided by the level of government quality and prefer to acquire foreign companies in politically stable countries with a high quality legal system. The results confirmed the influence of economic openness on the choice of a foreign company, but the nature of the influence was not established. Russian companies also prefer intra-industry cross-border mergers and acquisitions. The 2014 sanctions against Russia did not negatively affect the choice of foreign companies in M&A transactions initiated by Russian acquirers. JEL Code: G34.