The location of cross‐border and national mergers and acquisitions within the United States

Research on the location choice of foreign direct investment (FDI) focuses on the choice between countries. The within‐country location choice is either not analyzed at all or restricted to greenfield investments only. The majority of FDI, however, takes the form of cross‐border mergers and acquisitions (M&As). We develop and test a pair of hypotheses regarding location‐target selection for both cross‐border and national M&As across the United States, expecting differences in line with the liability of foreignness argument. Using a detailed firm‐level data set for M&As in the period 1985–2012, we compare location choices of cross‐border versus national M&As. We find that cross‐border M&As are more spatially concentrated, and tend to sort into larger agglomerations than national M&As. This finding holds both for urban agglomerations in isolation, as well as for agglomerations that take the economic geography of the United States into account.