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Assessing market attractiveness for mergers and acquisitions: the M&A Attractiveness Index Score

Appadu, N., Faelten, A., Moeller, S. & Vitkova, V. (2014). Assessing market attractiveness for mergers and acquisitions: the M&A Attractiveness Index Score. European Journal of Finance, 22(8-9), pp. 732-755. doi: 10.1080/1351847x.2014.888362


This paper presents a new scoring methodology designed to measure a country's capability to attract and sustain business investment activity in the forms of cross-border inflow and domestic mergers and acquisitions (M&A). We compute a theoretically grounded Index of Attractiveness for M&A purposes based on groups of country development factors which have been identified as key drivers of corporate investment activity in economics, finance and management literature. By using the Index, which has been successfully tested against country-level M&A activity in a time series analysis, we show that the drivers of M&A activity differ significantly at different stages of country maturity. Specifically, for mature countries, the quality of their regulatory systems, political stability, socio-economic environment and the sophistication of their physical infrastructure as well as the availability of sizeable assets all determine differences in country-level M&A volume and value activity. For countries at the transitional stage, it is instead their economic and financial health, socio-economic environment, technological developments and the quality of their infrastructure and the availability of sizeable assets which drive M&A activity. We also prove the predictability power of the Index, by a set of Granger causality tests, showing not only how country-level development drives future M&A activity but also how, to some extent, the inverse relationship is also true, i.e. that M&A activity can contribute to country development.

Publication Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 9 Apr 2014, available online:
Publisher Keywords: Country scores; Market development; Transitional economies; Emerging markets; Mergers and acquisitions
Subjects: H Social Sciences > HG Finance
J Political Science > JZ International relations
Departments: Bayes Business School > Finance
SWORD Depositor:
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