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The Cross-Border Mergers and Acquisitions Wave of the Late 1990s

In: Challenges to Globalization: Analyzing the Economics

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  • Simon Evenett

Abstract

To establish a benchmark, the cross border mergers and acquisitions wave of the late 1990s is compared to its predecessor in the late 1980s. It is found to be at least five times larger (in real terms), to involve firms from more OECD nations, and to include many more service sector transactions. However, in comparison to the size of national stock market capitalizations, foreign mergers with and acquisitions of domestic firms during this latest wave were small, especially in the Group of Seven leading industrial economies. The effect of cross border mergers and acquisitions on performance in one important service sector, banking, is also examined. Specifically, the relative importance of cross border mergers and acquisitions, domestic mergers and acquisitions, domestic entry and exit, and strategic alliances and joint ventures for interest rate spreads was estimated for 13 industrial nations. The principal findings suggest that the effects of these firm-driven changes in banking market structure differ markedly between EU member states and non-EU industrialized economies. This highlights the importance of differentiating between types of cross border inter-firm agreements and the pitfalls of generalising about the effects of the latest wave of cross border mergers and acquisitions as many of the harshest critics of globalization do.

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This chapter was published in:

  • Robert E. Baldwin & L. Alan Winters, 2004. "Challenges to Globalization: Analyzing the Economics," NBER Books, National Bureau of Economic Research, Inc, number bald04-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 9545.

    Handle: RePEc:nbr:nberch:9545

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    1. Evenett, Simon J., 2003. "Do all networks facilitate international commerce? US law firms and the international market for corporate control," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 520-537, December.
    2. Nam-Hoon Kang & Sara Johansson, 2000. "Cross-Border Mergers and Acquisitions: Their Role in Industrial Globalisation," OECD Science, Technology and Industry Working Papers 2000/1, OECD Publishing.
    3. Neven, Damien J & Röller, Lars-Hendrik, 2000. "The Scope of Conflict in International Merger Control," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2621, C.E.P.R. Discussion Papers.
    4. Xavier Vives, 2001. "Competition in the Changing World of Banking," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 17(4), pages 535-547.
    5. Allen N. Berger & Robert DeYoung & Hesna Genay & Gregory F. Udell, 1999. "Globalization of financial institutions: evidence from cross-border banking performance," Working Paper Series, Federal Reserve Bank of Chicago WP-99-25, Federal Reserve Bank of Chicago.
    6. repec:lan:wpaper:1192 is not listed on IDEAS
    7. Robert E. Lipsey & Zadia Feliciano, 2002. "Foreign Entry into U.S. Manufacturing by Takeovers and the Creation of New Firms," NBER Working Papers 9122, National Bureau of Economic Research, Inc.
    8. repec:lan:wpaper:1127 is not listed on IDEAS
    9. V N Balasubramanyam & C F Elliott, 2002. "Competition policy and the WTO," Working Papers 539974, Lancaster University Management School, Economics Department.
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    Cited by:
    1. Boateng, Agyenim & Hua, Xiuping & Uddin, Moshfique & Du, Min, 2014. "Home country macroeconomic factors on outward cross-border mergers and acquisitions: Evidence from the UK," Research in International Business and Finance, Elsevier, Elsevier, vol. 30(C), pages 202-216.
    2. Carletti, Elena & Hartmann, Philipp & Ongena, Steven, 2011. "The Economic Impact of Merger Control Legislation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8447, C.E.P.R. Discussion Papers.
    3. Anu Kovarikova Arro, 2005. "Globalization, Increasing Returns in Component Production, and the Pattern of Trade," CERGE-EI Working Papers wp265, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
    4. Chak Hung J. Cheng & Michael K. Salemi, 2009. "Feast and Famine: Explaining Big Swings in the Hong Kong Economy between 1981 and 2007," Working Papers 372009, Hong Kong Institute for Monetary Research.
    5. Rabin Hattari & Ramkishen S. Rajan, 2009. "Cross-border Mergers and Acquisitions (M&As) in Developing Asia: The Role of Financial Variables," Working Papers 362009, Hong Kong Institute for Monetary Research.
    6. Jung Hur & Rasyad A. Parinduri & Yohanes E. Riyanto, 2011. "Cross‐Border M&A Inflows And Quality Of Country Governance: Developing Versus Developed Countries," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 16(5), pages 638-655, December.
    7. Joseph A. Clougherty & Klaus Gugler & Lars Sørgard, 2012. " Cross-Border Mergers and Domestic Wages: Integrating Positive 'Spillover' Effects and Negative 'Bargaining' Effects," Department of Economics Working Papers wuwp136, Vienna University of Economics, Department of Economics.
    8. Paula Cristina da Silva Ferreira Neto Rodrigues & António Abílio Garrido Brandão & António de Melo Cerqueira, 2008. "The Macroeconomic Determinants of Cross Border Mergers and Acquisitions and Greenfield Investments," FEP Working Papers 281, Universidade do Porto, Faculdade de Economia do Porto.
    9. repec:dgr:uvatin:2008067 is not listed on IDEAS
    10. Lee, Bong-Soo & Min, Byung S., 2011. "Exchange rates and FDI strategies of multinational enterprises," Pacific-Basin Finance Journal, Elsevier, Elsevier, vol. 19(5), pages 586-603, November.

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