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Due largely to the localized nature of information flow, increasing geographic distance from the source of information is more likely to aggravate the consequence of information asymmetry when providing information cues on and activating the stereotype of the countryof-origin. The aim of NOC M&As is to obtain natural resources, and thus, this type of M&A is more subject to other countries’ geopolitical considerations. Furthermore, the target areas for NOCs are highly limited. NOCs’ global expansion and power to control global oil are far less than that of IOCs. (3) The acquisition of international oil companies (IOCs) is significantly more frequent than that of national oil companies (NOCs). Also, in Asia, such countries as China, India, and Singapore are active participants in global M&As, while some oil-producing countries in Africa and the Middle East are on the verge of M&A networks. The most proactive participants include the United States and Canada in North America, as well as the United Kingdom, Netherlands, France, Switzerland, and Russia in Europe. (2) Europe and North America are the most active regions in oil and gas cross-border M&As. Domestic M&As are the main form of global oil and gas M&As cross-border M&As account for only a small proportion.

(1) Oil and gas M&As follow the geographical proximity principle. Based on data for 26,705 M&As from 1997 to 2018, this paper establishes a global oil and gas M&A network, and conducts statistical and network analysis on the global oil and gas M&A behaviour of countries, industrial chains, and major companies from a geographical perspective. The global energy merger and acquisition (M&A) network plays an important part in understanding worldwide oil companies and energy flows. The paper contributes to the growing literature on the role of distance in financial decisions. Proximity in M&A transactions therefore is a necessary but not sufficient condition for success. However, when comparing the best and the worst deals, we are able to show a dramatic difference in distances and home bias: The most successful deals display on average a much stronger home bias and distinctively smaller distance between acquirer and target than the least successful deals. We interpret this as evidence for the familiarity hypothesis brought forward by Huberman (2001): Acquirers know about the existence of proximate targets and are more likely to merge with them without necessarily being better informed. That reaction is more important and becomes significant in times when the average distance between target and acquirer becomes larger, but never becomes economically significant. With an event study we show that investors react relatively better to proximate acquisitions than to distant ones. Acquirers that diversify into new business lines also display a stronger preference for more proximate targets. The home bias is stronger for small and relatively opaque target companies suggesting that local information is the decisive factor in explaining the results. At the same time, the average distances between target and acquirer increase articulately. There is a strong and consistent home bias for M&A transactions in the US, which is significantly declining during the observation period, i.e.

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We measure the ?home bias? against benchmark portfolios of hypothetical deals where the potential targets consist of firms of similar size in the same four-digit SIC code that have been targets in other transactions at about the same time or firms that have been listed at a stock exchange at that time. Using data of US domestic mergers and acquisitions transactions, this paper shows that acquirers have a preference for geographically proximate target companies.

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