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Location Choices of Multinational Firms: The Case of Mergers and Acquisitions

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Author Info

  • Bertrand, Olivier

    ()
    (Toulouse School of Economics)

  • Mucchielli , Jean-Louis

    ()
    (University of Paris 1 Panthéon - Sorbonne)

Abstract

This article examines the location choices of cross-border Mergers and Acquisitions (M&A) between OECD members' firms in the 1990's. In addition to traditional determinants of FDI, we estimate the impact of specific factors affecting the M&A location pattern. Two distinct econometric methods are implemented: the conditional logit and the count model. We find that the supply of target firms constrains the location of M&A. However, it is not the only determinant of location: the market size, the labor cost, the market access and the financial openness play a positive and significant role in the M&A location. A bandwagon effect is also observed. In the opposite, the corporate tax rate and the productivity decrease the probability to attract M&A. Cultural and geographic distances as well as differences in legal rules exert a negative significant impact on M&A strategies too. Only the ownership structure has contrasted results.

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Bibliographic Info

Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 22 (2007)
Issue (Month): ()
Pages: 181-209

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Handle: RePEc:ris:integr:0391

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Web page: http://econo.sejong.ac.kr/
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Related research

Keywords: Foreign Direct Investment; Merger and Acquisition; Location; Conditional Logit; Count Model;

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Cited by:
  1. Hideki Yamawaki, 2006. "The location of American and Japanese multinationals in Europe," International Economics and Economic Policy, Springer, vol. 3(2), pages 157-173, November.
  2. Alexander Hijzen & Holger G�rg & Miriam Manchin, 2006. "Cross-border mergers and acquisitions and the role of trade costs," European Economy - Economic Papers 242, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  3. Raff, Horst & Ryan, Michael & Stähler, Frank, 2005. "Asset Ownership and Foreign-Market Entry," Economics Working Papers 2006,01, Christian-Albrechts-University of Kiel, Department of Economics.
  4. Federica Liberini, 2014. "Corporate Taxes and the Growth of the Firm," KOF Working papers 14-354, KOF Swiss Economic Institute, ETH Zurich.
  5. Liberini, Federica, 2014. "Corporate Taxes and the Growth of the Firm," The Warwick Economics Research Paper Series (TWERPS) 1042, University of Warwick, Department of Economics.
  6. Wiji Arulampalam & Michael P. Devereux & Federica Liberini, 2012. "Taxes and the Location of Targets," Working Papers 1213, Oxford University Centre for Business Taxation.

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