Determiners of Domestic M&A Transactions in Russia

The paper performs the analysis of determiners influencing the propensity of M&A deals completion in the Russian Federation and the United Kingdom in the period from 2000 to 2020. The current research contributes to the existing literature by considering, along with relationship between the factors and the probability, the difference in determiners due to distinct institutional environments for two different types of markets: emerging and developed ones. As Russia is a typical example of emerging economy with poor institutes, the analyses compares Russian deals with transactions conducted in the UK with strong institutional environment. The United Kingdom was chosen as a developed country for comparison as the country is a great representative of developed European market and accounts for approximately 18,3% of European deal number. The estimation, basing on binary modeling, allows highlighting the main tendencies of Russian and UK M&A market, which can be essential for investors to find out core peculiarities of such acquisitions. Although there are some intersections between the determiners and their impact, the patterns differ across subsamples. Poor antimonopoly legislation leads to the positive effect of company’s size on the probability in Russia, while for UK acquirers stronger institutions and control of monopolies perform as deterrent factor, thus, leading to the negative effect of firm size. Moreover, as Russian economy is characterized by active participation of the Russian government in business, there is a highly significant influence of the state ownership on the acquisition completion. In contrast, in the United Kingdom context the state ownership has no significant effect on the propensity due to minimum governance involvement. Keywords: mergers and acquisitions, determinants of M&As, Russian domestic M&A deals