Does government stake influence cross-border deal completion? Evidence from Brazil

In the context of developing economies, government as an important stakeholder plays a proactive role in strategic investment decisions made by firms. In this paper we investigate whether the equity stake held by government in the acquiring and the target firm influence likelihood of deal completion. Our analysis of over 500 cross-border deals by Brazilian multinational firms suggests that government equity ownership has a material impact on deal completion. While government equity stake in the acquirer enhances likelihood of deal completion, government equity ownership in the target firm diminishes the possibility. Moreover, the effects of government equity ownership differ for public traded and private traded firms.