Mergers & Abenomics: The Determinants of M&A in Japan\u27s New Economy

This paper investigates the influence of various macroeconomic variables on Japan’s merger and acquisition (M&A) activity, both in terms of total deal value and total number of deals. Looking at monthly data from June 1997 to December 2013, I use econometric time-series analysis to find that: First, total deal value per month is not well explained by our macroeconomic variables, but about half of the variation in number of deals per month can be explained by our dataset. Second, the most important determinant in the total number of deals per month during our period is the level of national debt, and interest rates had the opposite effect from what was originally expected. Third, adding lag variables to our analysis proved to be relatively fruitless. Finally, when taking a look at only the past couple of years to determine the effects of “Abenomics” on M&A activity in Japan, I conclude that there is not enough data, and better results would be obtained in the future