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This paper studies how tax increases transmit across countries through multinationals’ internal networks of subsidiaries. Using a large subsidiary-level dataset of European firms and several exogenous tax hikes, we find that local business units cut capital investment in response to foreign tax increases. We document two channels that propagate these shocks through firms’ internal networks: production linkages among subsidiaries and financial constraints. In the aggregate, domestic investment and employment decline with higher exposure to foreign tax increases, suggesting that tax increases in one country can spill over to other foreign countries.

We examine the reasons why some bidders choose to voluntarily announce a merger negotiation before the signature of a definitive agreement. We propose an “announce-to-signal” explanation: early announcements allow bidders to signal to the target shareholders high synergy of the transaction, so as to overcome negotiation frictions and improve success rates. However, early announcements raise the target’s reservation price. In equilibrium, bidders rationally tradeoff higher success rates and costs. Consistent with this explanation, we show that a bidder’s weak bargaining position predicts an earlier announcement. Early announced transactions are associated with higher expected synergies and completion rates. Public competition and offer premium are also higher in these transactions, consistent with costly signaling. However, bidder announcement returns do not suggest the existence of overpayment in early announced deals.

We study earnings surprises disclosed hours before M&A announcements in which both merging firms operate in the same 1-digit SIC as the earnings-releasing firms. These surprises correlate with the acquirers’ M&A announcement return. Consistent with behavioral theory, one week after the M&A announcement, acquirers’ response to the earnings surprises disappears. While acquirers’ stock misvaluation is transitory, other effects to the M&A process are permanent. Larger earnings surprises are related to increases in bid competition, in takeover premiums, and in withdrawn M&As. These results indicate that behavioral biases, characterized by trend-seeking and extrapolation, generate material distortions in some M&A transactions.

While much attention has been paid to the role of foreign bribery in cross-border mergers and acquisitions, the evidence to date has been primarily anecdotal. I provide the first large-sample evidence that acquirers’ ability to bribe determines their engagement in the cross-border transactions. Using the OECD Anti-bribery Convention as an exogenous shock that limits acquirers’ ability to pay bribes in foreign markets, I find that deal frequency decreases significantly from affected countries after the law enactment. More corrupt target countries experience a greater decline in cross-border deals. However, the effect of the anti-bribery legislation is mainly concentrated on public acquirers. Postlegislation acquirers are on average smaller and more competitive. Finally, I argue that anti-bribery laws are costly – this is evident from deal value destruction that can be as high as 28% of the total transaction synergy.