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Cross-Border Mergers & Acquisitions: The Facts as a Guide for International Economics

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  • Steven Brakman
  • Harry Garretsen
  • Charles van Marrewijk

Abstract

Using a detailed and large data set on cross-border merger and acquisitions we discuss the relationship between theory and observed empirical characteristics:(i) most FDI is in the form of M&As, (ii) firms engaged in M&As seem to be ‘market-seeking’, (iii) M&As come in waves (the most recent wave is still unfolding), (iv) economic integration (international deregulation) stimulated M&As, (v) the size of and inequality between M&As grows over time.Our contention in this chapter is that these stylized facts drive and should drive recent theoretical contributions in the field of international economics that try to understand cross-border mergers and acquisitions. Although some models (notably Neary, 2003) explain a number of the characteristics, a full-fledged model of cross-border M&As that, at least in principle, can deal with all the characteristics is still lacking.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1823.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1823

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References

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  1. Neary, J Peter, 2004. "Cross-Border Mergers as Instruments of Comparative Advantage," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4325, C.E.P.R. Discussion Papers.
  2. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jenson & Samuel Kortum, 2000. "Plants and Productivity in International Trade," NBER Working Papers 7688, National Bureau of Economic Research, Inc.
  3. J. Peter Neary, 2000. "Monopolistic Competition and International Trade Theory," Working Papers, School Of Economics, University College Dublin 200025, School Of Economics, University College Dublin.
  4. van Marrewijk, Charles, 2006. "International Economics: Theory, application, and policy," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199280988, October.
  5. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2006. "Comparative advantage, cross-border mergers and merger waves: International economics meets industrial organization," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 7(1), pages 22-26, 04.
  6. Edward E. Leamer & James Levinsohn, 1994. "International Trade Theory: The Evidence," NBER Working Papers 4940, National Bureau of Economic Research, Inc.
  7. Neary, J Peter, 2006. "Trade Costs and Foreign Direct Investment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5933, C.E.P.R. Discussion Papers.
  8. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2005. "Cross-Border Mergers and Acquisitions: On Revealed Comparative Advantage and Merger Waves," CESifo Working Paper Series 1602, CESifo Group Munich.
  9. repec:got:cegedp:34 is not listed on IDEAS
  10. repec:ant:wpaper:1999018 is not listed on IDEAS
  11. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "The Effects of Mergers: An International Comparison," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  12. J Peter Neary, 2002. "Globalisation and Market Structure," Working Papers, School Of Economics, University College Dublin 200220, School Of Economics, University College Dublin.
  13. Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
  14. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
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Citations

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Cited by:
  1. Steven Brakman & Gus Garita & Harry Garretsen & Charles van Marrewijk, 2008. "Unlocking the Value of Cross-Border Mergers and Acquisitions," CESifo Working Paper Series 2294, CESifo Group Munich.
  2. Bhagat, Sanjai & Malhotra, Shavin & Zhu, PengCheng, 2011. "Emerging country cross-border acquisitions: Characteristics, acquirer returns and cross-sectional determinants," Emerging Markets Review, Elsevier, Elsevier, vol. 12(3), pages 250-271, September.
  3. Martin Gassebner & Pierre-Guillaume Méon, 2010. "Where do Creditor Rights Matter? Creditor Rights, Political Constraints, and Cross-Border M&A Activity," Working Papers CEB, ULB -- Universite Libre de Bruxelles 10-019.RS, ULB -- Universite Libre de Bruxelles.
  4. Joel Stiebale & Michaela Trax, 2011. "The effects of cross-border M&As on the acquirers' domestic performance: firm-level evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 957-990, August.
  5. Stiebale, Joel, 2013. "The impact of cross-border mergers and acquisitions on the acquirers' R&D — Firm-level evidence," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(4), pages 307-321.
  6. Joel Stiebale, 2010. "The Impact of Foreign Acquisitions on the Investors‘ R&D Activities – Firm-level Evidence," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0161, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Ray Chaudhuri, A., 2010. "Monopolization Through Acquisitions in Multimarket Oligopolies (Replaced by CentER DP 2011-112)," Discussion Paper, Tilburg University, Center for Economic Research 2010-96, Tilburg University, Center for Economic Research.
  8. Ray Chaudhuri, A., 2014. "Acquisitions by Multinationals and Trade Liberalization," Discussion Paper, Tilburg University, Center for Economic Research 2014-006, Tilburg University, Center for Economic Research.
  9. Wiji Arulampalam & Michael P. Devereux & Federica Liberini, 2012. "Taxes and the Location of Targets," Working Papers, Oxford University Centre for Business Taxation 1213, Oxford University Centre for Business Taxation.
  10. Charles van Marrewijk & Gus Garita, 2008. "Countries of a Feather flock together," Tinbergen Institute Discussion Papers 08-067/2, Tinbergen Institute, revised 19 Sep 2008.

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