Determinants of Deal Structure in Swedish M&As: The Role of Regulatory Differences and Cross-Border Activity

Abstract

In Sweden´s highly internationalized economy, M&As have become a common strategy for corporate growth. However, there is limited research on differences between domestic and cross-border mergers and acquisitions (M&As) involving Swedish firms. This study examines variations in deal value and payment method between domestic and cross-border M&As in Sweden, with a particular focus on the role of regulatory differences. Using a dataset of 207 M&A transactions from 2019 to 2023, two different ordinary least squares (OLS) regression models and two probit regression models are applied to assess the impact of total assets, return on equity, cross-border status and compliance with the Non-Financial Reporting Directive (NFRD). The results show that cross-border M&As are consistently linked to higher deal values, likely due to greater strategic benefits and market access. NFRD compliance initially correlates with higher deal values, but the effect becomes negative when controlling for firm size and profitability. NFRD also increases the likelihood of cash-financed deals. The findings are discussed in relation to the Efficient Market Hypothesis (EMH) and Agency theory, and compared with previous research. Overall, the study highlights how regulatory frameworks firm-specific characteristics shape M&As in Sweden. The results reject the hypothesis that cross-border deals are smaller and more often cash-financed, suggesting that regulatory differences reduce deal value and increase the likelihood of cash payments. These insights have implications for corporate decision-makers, investors and policymakers engaged in M&A strategy and regulation.