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Evidence of Fire-Sale M&A in European Transition Countries

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  • Josipa Visic

    (University of Split, Croatia)

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    Abstract

    The aim of this paper is to determine differences in variables that create investment climate and therefore affect the values of incoming crossborder M&A in selected European transition countries. Cluster analysis for 1999 and 2007 shows that countries with unfavourable investment climate received high levels of incoming cross-border M&A. Sole country in the cluster characterised by healthy investment area (Slovenia) had the highest GDP per capita accompanied with the lowest values of incoming cross-border M&A relative to its GDP. These results could be interpreted as an evidence of fire-sale M&A in most European transition countries. In 2010, situation changed and although recession left trace, data on cross-border M&A indicate that foreign investors focused more on companies which operated in countries with healthier economy. These results indicate that a healthy investment climate is necessary to provide a sustainable economic development of a country.

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    Bibliographic Info

    Article provided by University of Primorska, Faculty of Management Koper in its journal Managing Global Transitions.

    Volume (Year): 10 (2012)
    Issue (Month): 4 (Winter) ()
    Pages: 325-340

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    Handle: RePEc:mgt:youmgt:v:10:y:2012:i:4:p:325-340

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    Related research

    Keywords: cross-border M&A; fire-sale M&A; sustainable economic development; investment climate;

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    1. Deng, Ping, 2009. "Why do Chinese firms tend to acquire strategic assets in international expansion?," Journal of World Business, Elsevier, vol. 44(1), pages 74-84, January.
    2. repec:ebl:ecbull:v:7:y:2008:i:8:p:1-12 is not listed on IDEAS
    3. Miriam Manchin, 2004. "Determinants of European cross-border mergers and acquisitions," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 212, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
    4. Gunther Tichy, 2001. "What Do We Know about Success and Failure of Mergers?—Rejoinder," Journal of Industry, Competition and Trade, Springer, vol. 1(4), pages 431-440, December.
    5. Gunther Tichy, 2001. "What Do We Know about Success and Failure of Mergers?," Journal of Industry, Competition and Trade, Springer, vol. 1(4), pages 347-394, December.
    6. Ang, James & Mauck, Nathan, 2011. "Fire sale acquisitions: Myth vs. reality," Journal of Banking & Finance, Elsevier, vol. 35(3), pages 532-543, March.
    7. Hea-Jung Hyun & Hyuk Hwang Kim, 2007. "The Determinants of Cross-border M&As : the Role of Institutions and Financial Development in Gravity Model," Finance Working Papers 21934, East Asian Bureau of Economic Research.
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