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Cross-Border Mergers & Acquisitions and the Role of Trade Costs

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  • Görg, Holger
  • Hijzen, Alexander
  • Manchin, Miriam

Abstract

Cross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in the number of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether trade costs affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6397.

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Date of creation: Jul 2007
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Handle: RePEc:cpr:ceprdp:6397

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Keywords: FDI; gravity; mergers and acquisitions; trade costs;

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