Pub Date : 2025-03-19DOI: 10.1016/j.intfin.2025.102145
Caroline Le Moign
This study evaluates the impact of Europe’s first asymmetric speed bump, an order delay introduced by Eurex in 2019 for French equity options, as an innovative response to high-frequency trading externalities. Using a matched transaction-level database and a difference-in-difference strategy, we analyze liquidity changes on Eurex and its competitor Euronext. Results show significant improvements in Eurex liquidity, with decreased spreads and increased market depth. Notably, positive spillover effects were observed on Euronext for cross-listed options, with decreased spreads and an increase in aggressive HFT presence. These findings support the effectiveness of asymmetric speed bumps in mitigating latency arbitrage and enhancing market liquidity across competing platforms.
{"title":"Securing passive liquidity: The impact of Europe’s first asymmetric speed bump on market liquidity","authors":"Caroline Le Moign","doi":"10.1016/j.intfin.2025.102145","DOIUrl":"10.1016/j.intfin.2025.102145","url":null,"abstract":"<div><div>This study evaluates the impact of Europe’s first asymmetric speed bump, an order delay introduced by Eurex in 2019 for French equity options, as an innovative response to high-frequency trading externalities. Using a matched transaction-level database and a difference-in-difference strategy, we analyze liquidity changes on Eurex and its competitor Euronext. Results show significant improvements in Eurex liquidity, with decreased spreads and increased market depth. Notably, positive spillover effects were observed on Euronext for cross-listed options, with decreased spreads and an increase in aggressive HFT presence. These findings support the effectiveness of asymmetric speed bumps in mitigating latency arbitrage and enhancing market liquidity across competing platforms.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102145"},"PeriodicalIF":5.4,"publicationDate":"2025-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143686346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-19DOI: 10.1016/j.intfin.2025.102146
Theofilia Kaourma , Andreas Milidonis , George Nishiotis , Marios Panayides
This paper examines the trading behavior of individual investors using a proprietary intraday dataset of a large pool of retail investor aggregate (minute by minute) long and short positions in EUR/USD. Standard event study analysis shows no significant adjustment in trading ahead of scheduled macro news announcements and trading contrary to the announcement surprise after the event. A panel regression analysis shows that such contrarian trading behavior is mainly driven by lagged returns rather than fundamental macro news. Further, intraday time series analysis shows that the lagged overall news sentiment also significantly affects retail investor trading. Finally, to verify the uninformed nature of retail trading, we show that simple cross-over trading strategies that exploit retail investors’ order flow could be profitable. Overall, our results suggest that retail investors in currency markets are influenced by news sentiment and past returns, but do not appear able to extract fundamental information from public news. Our findings support the differential abilities of market participants to interpret public information as reflected through the intraday trading activity of retail currency traders.
{"title":"News and intraday retail investor order flow in foreign exchange markets","authors":"Theofilia Kaourma , Andreas Milidonis , George Nishiotis , Marios Panayides","doi":"10.1016/j.intfin.2025.102146","DOIUrl":"10.1016/j.intfin.2025.102146","url":null,"abstract":"<div><div>This paper examines the trading behavior of individual investors using a proprietary intraday dataset of a large pool of retail investor aggregate (minute by minute) long and short positions in EUR/USD. Standard event study analysis shows no significant adjustment in trading ahead of scheduled macro news announcements and trading contrary to the announcement surprise after the event. A panel regression analysis shows that such contrarian trading behavior is mainly driven by lagged returns rather than fundamental macro news. Further, intraday time series analysis shows that the lagged overall news sentiment also significantly affects retail investor trading. Finally, to verify the uninformed nature of retail trading, we show that simple cross-over trading strategies that exploit retail investors’ order flow could be profitable. Overall, our results suggest that retail investors in currency markets are influenced by news sentiment and past returns, but do not appear able to extract fundamental information from public news. Our findings support the differential abilities of market participants to interpret public information as reflected through the intraday trading activity of retail currency traders.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102146"},"PeriodicalIF":5.4,"publicationDate":"2025-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143686345","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-18DOI: 10.1016/j.intfin.2025.102153
Oskar Kowalewski , Prabesh Luitel , Rosanne Vanpée
This paper examines the impact of obtaining a sovereign credit rating for the first time on financial development in 50 emerging countries. Controlling for endogeneity and selection bias, we show that receiving an initial sovereign credit rating significantly transforms domestic financial systems. Rated countries experience a reallocation of bank assets, reduced reliance on domestic bank financing, and increased access to international bond markets, enabling expanded private-sector credit. Sovereign ratings also stimulate local currency bond market development and enhance foreign currency bond issuance. Additionally, they attract portfolio equity inflows and foster the internationalization of domestic banks, though their effects on direct debt flows and FDI are less pronounced. Overall, our findings highlight the critical role of sovereign credit ratings in advancing financial development and integration in emerging markets.
{"title":"Sovereign credit rating provision and financial development","authors":"Oskar Kowalewski , Prabesh Luitel , Rosanne Vanpée","doi":"10.1016/j.intfin.2025.102153","DOIUrl":"10.1016/j.intfin.2025.102153","url":null,"abstract":"<div><div>This paper examines the impact of obtaining a sovereign credit rating for the first time on financial development in 50 emerging countries. Controlling for endogeneity and selection bias, we show that receiving an initial sovereign credit rating significantly transforms domestic financial systems. Rated countries experience a reallocation of bank assets, reduced reliance on domestic bank financing, and increased access to international bond markets, enabling expanded private-sector credit. Sovereign ratings also stimulate local currency bond market development and enhance foreign currency bond issuance. Additionally, they attract portfolio equity inflows and foster the internationalization of domestic banks, though their effects on direct debt flows and FDI are less pronounced. Overall, our findings highlight the critical role of sovereign credit ratings in advancing financial development and integration in emerging markets.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102153"},"PeriodicalIF":5.4,"publicationDate":"2025-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143641922","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-17DOI: 10.1016/j.intfin.2025.102142
Vo Phuong Mai Le , David Meenagh , Patrick Minford
Developed economies have experienced slower growth since the 2008 financial crisis, creating fears of “secular stagnation.” Rational expectations models have forward-looking sunspot solutions, which could cause this; here we investigate the case of Japan. We show that a New Keynesian model with a weak equilibrium growth path driven by pessimism sunspot belief shocks matches Japanese economic behaviour. Another possibility is a conventional model where productivity growth has simply slowed down for unknown reasons. Nevertheless, a welfare-optimising approach implies fiscal policy should commit to eliminating the potential sunspot while being prepared to revert to normal policy if inflation rises.
{"title":"Could an economy get stuck on a rational pessimism sunspot path? The case of Japan","authors":"Vo Phuong Mai Le , David Meenagh , Patrick Minford","doi":"10.1016/j.intfin.2025.102142","DOIUrl":"10.1016/j.intfin.2025.102142","url":null,"abstract":"<div><div>Developed economies have experienced slower growth since the 2008 financial crisis, creating fears of “secular stagnation.” Rational expectations models have forward-looking sunspot solutions, which could cause this; here we investigate the case of Japan. We show that a New Keynesian model with a weak equilibrium growth path driven by pessimism sunspot belief shocks matches Japanese economic behaviour. Another possibility is a conventional model where productivity growth has simply slowed down for unknown reasons. Nevertheless, a welfare-optimising approach implies fiscal policy should commit to eliminating the potential sunspot while being prepared to revert to normal policy if inflation rises.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102142"},"PeriodicalIF":5.4,"publicationDate":"2025-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143637202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.intfin.2025.102141
Zhongxia Zhang
Many central banks have adopted inflation targeting as their monetary policy frameworks since 1990. Yet, monetary authorities’ track records of managing inflation with respect to the stated policy objectives have varied significantly. This paper examines how inflation targeting track records affect asset prices within three common asset classes: stocks, bonds, and exchange rates. The analysis reveals heterogeneous and enduring effects of track records on financial markets. A stronger track record in inflation targeting leads to a more negative reaction from stock markets to inflationary pressures, with effects persisting for about four quarters. Additionally, the sensitivity of rising long-term sovereign bond yields to inflation diminishes for about three quarters as the track record improves. Moreover, credible inflation targeters are more likely to allow greater flexibility in exchange rates to deal with inflationary shocks. Consequently, credible inflation targeting track records produce desirable policy outcomes by reinforcing monetary policy transmission and saving fiscal space.
{"title":"Does inflation targeting track record matter for asset prices? Evidence from stock, bond, and foreign exchange markets","authors":"Zhongxia Zhang","doi":"10.1016/j.intfin.2025.102141","DOIUrl":"10.1016/j.intfin.2025.102141","url":null,"abstract":"<div><div>Many central banks have adopted inflation targeting as their monetary policy frameworks since 1990. Yet, monetary authorities’ track records of managing inflation with respect to the stated policy objectives have varied significantly. This paper examines how inflation targeting track records affect asset prices within three common asset classes: stocks, bonds, and exchange rates. The analysis reveals heterogeneous and enduring effects of track records on financial markets. A stronger track record in inflation targeting leads to a more negative reaction from stock markets to inflationary pressures, with effects persisting for about four quarters. Additionally, the sensitivity of rising long-term sovereign bond yields to inflation diminishes for about three quarters as the track record improves. Moreover, credible inflation targeters are more likely to allow greater flexibility in exchange rates to deal with inflationary shocks. Consequently, credible inflation targeting track records produce desirable policy outcomes by reinforcing monetary policy transmission and saving fiscal space.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102141"},"PeriodicalIF":5.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143592075","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.intfin.2025.102144
Yike Sun
The counter-cyclical factor is a foreign exchange policy instrument employed by the Chinese monetary authority to adjust the central parity rate of the renminbi (RMB). This study examines how this policy tool influences the RMB’s co-movements with other currencies. A novel measure of the counter-cyclical factor’s intensity is derived from a rolling estimation of the RMB two-pillar model, enabling a more precise evaluation of the factor’s role. This measure is then incorporated into a modified Frankel–Wei model to assess the factor’s influence. Empirical results indicate that, although the counter-cyclical factor is applied more intensively during the second implementation phase, it reduces RMB co-movements more significantly during the first phase. Further analysis suggests that the initial implementation induces notable RMB appreciation, which in turn weakens the RMB’s correlations with other currencies.
{"title":"The effects of the counter-cyclical factor on renminbi co-movements","authors":"Yike Sun","doi":"10.1016/j.intfin.2025.102144","DOIUrl":"10.1016/j.intfin.2025.102144","url":null,"abstract":"<div><div>The counter-cyclical factor is a foreign exchange policy instrument employed by the Chinese monetary authority to adjust the central parity rate of the renminbi (RMB). This study examines how this policy tool influences the RMB’s co-movements with other currencies. A novel measure of the counter-cyclical factor’s intensity is derived from a rolling estimation of the RMB two-pillar model, enabling a more precise evaluation of the factor’s role. This measure is then incorporated into a modified Frankel–Wei model to assess the factor’s influence. Empirical results indicate that, although the counter-cyclical factor is applied more intensively during the second implementation phase, it reduces RMB co-movements more significantly during the first phase. Further analysis suggests that the initial implementation induces notable RMB appreciation, which in turn weakens the RMB’s correlations with other currencies.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102144"},"PeriodicalIF":5.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143592166","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-08DOI: 10.1016/j.intfin.2025.102143
Hao Wang , Shuting Tan , Yonghui Han
This paper investigates the impact of international education exchange on cross-border mergers and acquisitions (CBMA). Using a comprehensive panel dataset covering 141 countries from 2006 to 2018, we find that international students studying in China have a positive impact on China’s outbound CBMA. Such an effect operates through diplomatic relations, economic cooperation and cultural convergence as the underlying mechanisms. The effect of international education exchange is more pronounced for degree-seeking students than for non-degree-seeking students. Moreover, non-degree-seeking scholarship recipients exert a stronger influence on CBMA than degree-seeking scholarship recipients.
{"title":"Beyond education: International student inflow and outbound cross-border mergers and acquisitions","authors":"Hao Wang , Shuting Tan , Yonghui Han","doi":"10.1016/j.intfin.2025.102143","DOIUrl":"10.1016/j.intfin.2025.102143","url":null,"abstract":"<div><div>This paper investigates the impact of international education exchange on cross-border mergers and acquisitions (CBMA). Using a comprehensive panel dataset covering 141 countries from 2006 to 2018, we find that international students studying in China have a positive impact on China’s outbound CBMA. Such an effect operates through diplomatic relations, economic cooperation and cultural convergence as the underlying mechanisms. The effect of international education exchange is more pronounced for degree-seeking students than for non-degree-seeking students. Moreover, non-degree-seeking scholarship recipients exert a stronger influence on CBMA than degree-seeking scholarship recipients.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102143"},"PeriodicalIF":5.4,"publicationDate":"2025-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143576746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-06DOI: 10.1016/j.intfin.2025.102135
Mingtao Zhou, Yong Ma
This study examines the informative role of climate risk in improving the predictability of global stock market volatility. By aggregating four climate risk proxies of Faccini et al. (2023), relating to physical climate impacts and climate mitigation actions, we reveal that aggregate climate risk is a significantly positive predictor of stock volatility across 32 international markets. This predictability persists in out-of-sample tests and cannot be subsumed by relevant economic and financial uncertainty measures. However, the predictive power of aggregate climate risk exhibits noteworthy variations over time and across regions; it weakens when economic conditions deteriorate, whereas it strengthens following the Paris Agreement and in regions with advanced financial development, high energy intensity, and strong climate change readiness. Moreover, by dissecting the multiple facets of climate risk, we show that physical risks, especially natural disasters, have much stronger predictability than transition risks. These predictive insights offer valuable guidance for risk management, policy planning, and the adjustment of asset pricing models in response to the evolving global climate risk landscape.
{"title":"Climate risk and predictability of global stock market volatility","authors":"Mingtao Zhou, Yong Ma","doi":"10.1016/j.intfin.2025.102135","DOIUrl":"10.1016/j.intfin.2025.102135","url":null,"abstract":"<div><div>This study examines the informative role of climate risk in improving the predictability of global stock market volatility. By aggregating four climate risk proxies of Faccini et al. (2023), relating to physical climate impacts and climate mitigation actions, we reveal that aggregate climate risk is a significantly positive predictor of stock volatility across 32 international markets. This predictability persists in out-of-sample tests and cannot be subsumed by relevant economic and financial uncertainty measures. However, the predictive power of aggregate climate risk exhibits noteworthy variations over time and across regions; it weakens when economic conditions deteriorate, whereas it strengthens following the Paris Agreement and in regions with advanced financial development, high energy intensity, and strong climate change readiness. Moreover, by dissecting the multiple facets of climate risk, we show that physical risks, especially natural disasters, have much stronger predictability than transition risks. These predictive insights offer valuable guidance for risk management, policy planning, and the adjustment of asset pricing models in response to the evolving global climate risk landscape.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102135"},"PeriodicalIF":5.4,"publicationDate":"2025-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143562512","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-05DOI: 10.1016/j.intfin.2025.102139
Christina Atanasova, Frederick H. Willeboordse
We examine the impact of organizational structure on corporate liquidity, specifically focusing on how business diversification influences firms’ choice between bank lines of credit and cash holdings. Using a large sample of publicly traded companies from both developed and emerging markets, we observe that diversified firms operating across multiple industries (segments) tend to rely more heavily on bank lines of credit than their more focused counterparts. We find that lower correlations in the investment opportunities across business segments and higher correlations between investment opportunities and cash flows are associated with a greater reliance on bank lines of credit as a source of corporate liquidity. Moreover, for Emerging Market firms that face binding financial constraints, the effect of diversification on liquidity management is stronger. Our findings do not support the notion that this behavior is driven by diversified firms with lower aggregate risk or better corporate governance. Instead, the results are consistent with the monitored insurance hypothesis, where diversified firms with lower liquidity risk and hedging requirements use bank lines of credit more extensively.
{"title":"The impact of corporate diversification on liquidity management: Evidence from lines of credit","authors":"Christina Atanasova, Frederick H. Willeboordse","doi":"10.1016/j.intfin.2025.102139","DOIUrl":"10.1016/j.intfin.2025.102139","url":null,"abstract":"<div><div>We examine the impact of organizational structure on corporate liquidity, specifically focusing on how business diversification influences firms’ choice between bank lines of credit and cash holdings. Using a large sample of publicly traded companies from both developed and emerging markets, we observe that diversified firms operating across multiple industries (segments) tend to rely more heavily on bank lines of credit than their more focused counterparts. We find that lower correlations in the investment opportunities across business segments and higher correlations between investment opportunities and cash flows are associated with a greater reliance on bank lines of credit as a source of corporate liquidity. Moreover, for Emerging Market firms that face binding financial constraints, the effect of diversification on liquidity management is stronger. Our findings do not support the notion that this behavior is driven by diversified firms with lower aggregate risk or better corporate governance. Instead, the results are consistent with the monitored insurance hypothesis, where diversified firms with lower liquidity risk and hedging requirements use bank lines of credit more extensively.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"101 ","pages":"Article 102139"},"PeriodicalIF":5.4,"publicationDate":"2025-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143562511","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-04DOI: 10.1016/j.intfin.2025.102138
Yunhao Dai , Xu Huang , Weiqiang Tan , Daifei (Troy) Yao
This study explores the impact of regional religious similarity on merger and acquisition (M&A) likelihood and post-merger outcomes, diverging from prior research that treats religious adherents as a homogeneous group. Analyzing a comprehensive sample of mergers, we find that pairs of firms with more similar regional religious compositions are more likely to engage in M&As and experience improved merger announcement returns. This religious alignment between acquiring and target firms is also linked to superior post-merger operating performance and efficiency. Cross-sectional analyses reveal that employee integration serves as a critical channel through which these performance gains are realized. Market reactions to merger announcements are more favorable when the target firm has a larger workforce, operates in the same industry, or the acquiring firm is more diversified than the target. Our findings suggest that religious similarity fosters mutual understanding, builds trust, and reduces friction in collaborative efforts, making it a significant driver of post-merger synergy. These insights extend beyond the context of any single market, highlighting the broader role of cultural alignment in enhancing M&A success.
{"title":"Religious similarity in mergers and acquisitions","authors":"Yunhao Dai , Xu Huang , Weiqiang Tan , Daifei (Troy) Yao","doi":"10.1016/j.intfin.2025.102138","DOIUrl":"10.1016/j.intfin.2025.102138","url":null,"abstract":"<div><div>This study explores the impact of regional religious similarity on merger and acquisition (M&A) likelihood and post-merger outcomes, diverging from prior research that treats religious adherents as a homogeneous group. Analyzing a comprehensive sample of mergers, we find that pairs of firms with more similar regional religious compositions are more likely to engage in M&As and experience improved merger announcement returns. This religious alignment between acquiring and target firms is also linked to superior post-merger operating performance and efficiency. Cross-sectional analyses reveal that employee integration serves as a critical channel through which these performance gains are realized. Market reactions to merger announcements are more favorable when the target firm has a larger workforce, operates in the same industry, or the acquiring firm is more diversified than the target. Our findings suggest that religious similarity fosters mutual understanding, builds trust, and reduces friction in collaborative efforts, making it a significant driver of post-merger synergy. These insights extend beyond the context of any single market, highlighting the broader role of cultural alignment in enhancing M&A success.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"100 ","pages":"Article 102138"},"PeriodicalIF":5.4,"publicationDate":"2025-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143548427","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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