We posit that acquisition decisions and outcomes are affected by the availability of migration networks, social and business networks linking migration sending and receiving states. We find that the likelihood of bidders pursuing targets headquartered in migration sending states increases with the size of the migration network. This effect is particularly strong when a) acquirers and targets are in the same industry, b) migration networks span distant states, and c) targets are small. Also, we find smaller takeover premia and higher acquirer announcement returns when there are strong migration networks between the states in which acquirers and targets are located. Our collective evidence is consistent with the notion that access to soft information from migration networks helps mitigate information asymmetry about target firms.

JEL Classification: G14; G34; O15; R23
Keywords: Migration flows; mergers and acquisitions; information asymmetry​