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Location Choices Of Multinational Firms: The Case Of Mergers And Acquisitions

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  • Olivier Bertrand
  • Jean-Louis Mucchielli
  • Habib Zitouna

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

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2004 with number 124.

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Date of creation: 17 Sep 2004
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Handle: RePEc:ecj:ac2004:124

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Cited by:
  1. 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.
  2. Görg, Holger & Hijzen, Alexander & Manchin, Miriam, 2007. "Cross-Border Mergers & Acquisitions and the Role of Trade Costs," CEPR Discussion Papers 6397, C.E.P.R. Discussion Papers.
  3. Federica Liberini, 2014. "Corporate Taxes and the Growth of the Firm," KOF Working papers 14-354, KOF Swiss Economic Institute, ETH Zurich.
  4. 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.
  5. Hijzen, Alexander & Görg, Holger & Manchin, Miriam, 2008. "Cross-border mergers and acquisitions and the role of trade costs," European Economic Review, Elsevier, vol. 52(5), pages 849-866, July.
  6. 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.
  7. 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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