Intra-industry and inter-country effects of European mergers

We empirically test the valuation effects of European M&A announcements on rivals within the target's country (intra-industry effects) and on other European rivals (inter-country effects), for the period of 1996 to 1999. We find evidence of inter-country effects that has not previously been documented, suggesting that the ongoing integration of European economies, supported by the introduction of the euro, facilitates the transmission of private information across country boundaries in Europe. We also conduct a cross-sectional analysis to isolate potential sources of intra-industry and inter-country effects.