Openness to foreign investments is associated with risks. To mitigate these risks, many high-income countries strengthened the control of foreign investments over the last decade in an increasing number of sectors considered critical. This is the first cross-country panel study to examine the economic effects of investment screening mechanisms. We combine deal-level data on cross-border mergers and acquisitions (M&A) for the period 2007-2022 with information on sectoral investment screening. Using a staggered triple difference design, we estimate a reduction of 11.7 to 16.0 percent in the number of M&A in a newly screened sector. The effects are driven by minority acquisitions, deals involving a foreign government or state-owned enterprises or US firms as investors. There is no reduction in the number of pure intra-EU deals, most of which are not subject to screening. The findings call policymakers’ attention to weighing the benefits of national security and the economic costs of introducing investment screening.