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Horizontal, Vertical, and Conglomerate Cross-Border Acquisitions

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  • Nils Herger
  • Steve McCorriston

Abstract

Using data on cross-border acquisitions (CBAs), this paper explores the distribution of alternative strategies pursued when multinational enterprises integrate foreign subsidiaries into their organizational structure. Based on a measure of vertical relatedness, each of the 165,000 acquisitions in our sample covering 31 source and 58 host countries can be classified as horizontal, vertical, or conglomerate. Three novel features of CBAs are highlighted. First, horizontal and vertical CBAs are relatively stable over time. Second, a considerable part of CBAs are conglomerate acquisitions whereby the financial sector is an important, though by far not the only, segment involved. Third, the wave-like growth of CBAs arises primarily from changes in conglomerate activity.

Suggested Citation

  • Nils Herger & Steve McCorriston, 2016. "Horizontal, Vertical, and Conglomerate Cross-Border Acquisitions," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(2), pages 319-353, June.
    • Handle: RePEc:pal:imfecr:v:64:y:2016:i:2:p:319-353
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    Cited by:

    1. Ye, Silin & Zhou, Jing & Jiang, Yunwen & Liu, Xiaming, 2023. "Managers as the bridge: How cultural friction influences the integration of cross-border mergers and acquisitions," International Business Review, Elsevier, vol. 32(4).
    2. Thompson, Edmund R. & Dericks, Gerard H. & Fai, Felicia, 2019. "Development and validation of a firm-level vertical and horizontal internationalization metric," International Business Review, Elsevier, vol. 28(3), pages 533-543.
    3. Pierre-Louis Vezina, 2017. "Resource discoveries and FDI bonanzas: An illustration from Mozambique," OxCarre Working Papers 199, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    4. Bai, Ye & Girma, Sourafel & Riaño, Alejandro, 2024. "Corporate acquisitions and firm-level uncertainty: Domestic versus cross-border deals," Journal of International Money and Finance, Elsevier, vol. 140(C).
    5. Sébastien Miroudot & Davide Rigo, 2022. "Multinational production and investment provisions in preferential trade agreements [Intra-industry foreign direct investment]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1275-1308.
    6. Monastyrenko, Evgenii, 2017. "Eco-efficiency outcomes of mergers and acquisitions in the European electricity industry," Energy Policy, Elsevier, vol. 107(C), pages 258-277.
    7. Sébastien Miroudot & Ming Ye, 2020. "Multinational production in value-added terms," Economic Systems Research, Taylor & Francis Journals, vol. 32(3), pages 395-412, July.

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