COVID-19의 확산이 한국 기업의 인수합병 속도에 미친 영향

The COVID-19 Pandemic has significantly affected society and economies. It also has affected business strategy. This research examines the impact of COVID-19 on mergers and acquisitions (M&As) among firms, particularly the speed of M&As. M&As is one of the well-known growth strategies of firms. Compared to other growth strategies, M&As require massive investment, while it has low flexibility. Although there has been abundant research regarding M&As, the speed of M&As has received only limited attention from scholars. However, understanding the speed of M&As is very important because it is associated with the pre-merge conditions, the acquirer’s capability, the cost of M&As, and post-merger performance. The COVID-19 pandemic has adversely affected the speed of M&As for four reasons. First, the changes in institutions and regulations due to the COVID-19 pandemic can be new restrictions on the execution of M&As. Second, since there are more concerns that an acquirer needs to take care of in M&As, the mergers and acquisition deal contract would have higher complexity. In this case, the speed of M&As will slow down. Third, due to the lockdown and shut down in order to prevent the spread of COVID-19, the acquirer and target firm may experience difficulties in communication, and consequently, the speed of M&As becomes slower. This situation is similar to the geographic distance between an acquirer and a target firm, which adversely affects the mergers ad acquisition deal completion in prior research. Fourth, the COIVD-19 pandemic may have an adverse impact on the acquirer’s capability and willingness to acquire the target firm as well as the value of the target firm, which will, in turn, slow down the mergers and acquisition deal. In addition, if a firm acquires a target in a foreign country (cross-border M&As), the negative impact of the spread of COVID-19 on the speed of M&As will be weakened. There are four reasons why. First, acquiring a firm in another country is usually much more complicated than acquiring a firm in the same country; acquirers seeking cross-border targets would have better capabilities than other acquirers seeking only domestic targets. Therefore, they have fewer obstacles in completing M&A deals, and thus the decrease in M&A speed will be limited. Second, purchasing a foreign firm can enhance the long-term global flexibility of an acquirer. As a result, firms may more actively engage in cross-border M&As. Third, as prior literature regarding M&As in a crisis suggests, a firm from a country with less damages from a crisis more activelly engaes in cross-border M&As. Since South Korea has experienced much less difficulties than other countries during the pandemic, firms from South Korea are more likely to seek opportunities from cross-border M&As. Fourth, the reputation of South Korea during the COVID-19 pandemic may help Korean firms’ acquisition of firms in other countries. In prior research, the home country’s reputation affects the completion of M&A deals because there are fewer concerns about the information asymmetry with a foreign acquirer if the acquirer’s home country has a good reputation. Consequently, the liability of foreignness in M&A deals diminishes. This research analyzed the M&A data from SDC Platinum using the Cox Proportional Hazard model to test the two hypotheses. The empirical result supported both hypotheses. Also, the post-hoc analysis generally supported the hypotheses. This research contributes to the business research in three ways: 1) showing the empirical evidence of how the COVID-19 pandemic affects the strategic choices by firms, 2) elucidating the importance of understanding the speed of M&A deal completion in the crisis context, and 3) suggesting why firms execute massive investments during a crisis.