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The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions

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  • MC. Di Guardo
  • E. Marrocu

    ()

  • R. Paci

    ()

Abstract

The paper explores the concurrent effects of cultural, political, and spatial distances on M&A flows occurring between any two countries belonging to the whole European Union (27 States) or to the European Neighbors group (16 States) over the period 2000-2011 . By employing zero-inflated negative binomial specifications, entailing both a binary and count process, we adequately model the two different mechanisms which may generate zero observations in the cross-border bilateral deals. Zeros may be due to either the lack of any transactions or unsuccessful negotiations. We find robust evidence that the multi-dimensional distance between two countries negatively affects the probability that they will engage in M&A deals, while the recurrence rate of these deals is positively related to population, gross domestic product, and technological capital and negatively related to geographical distance.

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Bibliographic Info

Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 201308.

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Date of creation: 2013
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Handle: RePEc:cns:cnscwp:201308

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Keywords: zero-inflated models; geographical distance; European Union; european neighboring countries; cultural and political distances; Cross-border M&As;

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  1. Nicolas Coeurdacier & Roberto A. de Santis & Antonin Aviat, 2009. "Cross-border mergers and acquisitions and European integration," Sciences Po publications, Sciences Po info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  2. Rossi, Stefano & Volpin, Paolo F., 2004. "Cross-country determinants of mergers and acquisitions," Journal of Financial Economics, Elsevier, Elsevier, vol. 74(2), pages 277-304, November.
  3. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "Cultural Biases in Economic Exchange?," Economics Working Papers, European University Institute ECO2007/42, European University Institute.
  4. Richard Portes & Hélène Rey, 2001. "The Determinants of Cross-Border Equity Flows," DELTA Working Papers, DELTA (Ecole normale supérieure) 2001-08, DELTA (Ecole normale supérieure).
  5. Michaela Dodini & Marco Fantini, 2006. "The EU Neighbourhood Policy: Implications for Economic Growth and Stability," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 44, pages 507-532, 09.
  6. Jung Hur & Rasyad A. Parinduri & Yohanes E. Riyanto, 2007. "Cross-Border M&A Inflows and the Quality of Institutions: A Cross-Country Panel Data Analysis," SCAPE Policy Research Working Paper Series, National University of Singapore, Department of Economics, SCAPE 0708, National University of Singapore, Department of Economics, SCAPE.
  7. Julian Birkinshaw, 2000. "Managing the Post-acquisition Integration Process: How the Human Iintegration and Task Integration Processes Interact to Foster Value Creation," Journal of Management Studies, Wiley Blackwell, Wiley Blackwell, vol. 37, pages 395-425, 05.
  8. Peter Egger, 2008. "On the Role of Distance for Bilateral Trade," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 31(5), pages 653-662, 05.
  9. Leo Sleuwaegen, 1998. "Cross-border Mergers and EC Competition Policy," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 21(8), pages 1077-1093, November.
  10. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
  11. Agnès Bénassy-Quéré & Maylis Coupet & Thierry Mayer, 2007. "Institutional Determinants of Foreign Direct Investment," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 30(5), pages 764-782, 05.
  12. Dunning, John H, 1973. "The Determinants of International Production," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 289-336, November.
  13. Maureen Lankhuizen & Henri L.F. de Groot & Gert-Jan M. Linders, 2009. "The Trade-Off between Foreign Direct Investments and Exports: The Role of Multiple Dimensions of Distance," Tinbergen Institute Discussion Papers, Tinbergen Institute 09-050/3, Tinbergen Institute.
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