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The Perfect Match: Assortative Matching in International Acquisitions

Author

Listed:
  • Veronica Rappoport

    (London School of Economics)

  • Catherine Thomas

    (London School of Economics)

  • Bernard Salanie

    (Columbia University)

  • Maria Guadalupe

    (INSEAD)

Abstract

This paper empirically characterizes the matching between firms in domestic and cross-border mergers and acquisitions (M&A). The analysis is guided by a theoretical framework constructed following the premises of the new trade theory. It assumes that firms are heterogeneous, within the industry and country of origin, in two characteristics: productivity and size. By a revealed preference argument, if an acquisition takes place, it signals the existence of synergies between the characteristics of two firms. We estimate the sources of synergies between merged firms based on data on domestic and international M&A for five large European countries, France, Germany, Italy, U.K., and Spain, collected by Zephyr between 1997 and 2011. The estimated model is used to compute the effect of FDI on the resulting host country productivity and size distribution of firms.

Suggested Citation

  • Veronica Rappoport & Catherine Thomas & Bernard Salanie & Maria Guadalupe, 2013. "The Perfect Match: Assortative Matching in International Acquisitions," 2013 Meeting Papers 1000, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:1000
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    References listed on IDEAS

    as
    1. Alfred Galichon & Bernard Salanié, 2022. "Cupid’s Invisible Hand: Social Surplus and Identification in Matching Models [An Empirical Model of the Medical Match]," Review of Economic Studies, Oxford University Press, vol. 89(5), pages 2600-2629.
    2. Joel David, 2012. "The Aggregate Implications of Mergers and Acquisitions," 2012 Meeting Papers 1178, Society for Economic Dynamics.
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    5. repec:hal:spmain:info:hdl:2441/5rkqqmvrn4tl22s9mc0c7apsi is not listed on IDEAS
    6. Nocke, Volker & Yeaple, Stephen, 2007. "Cross-border mergers and acquisitions vs. greenfield foreign direct investment: The role of firm heterogeneity," Journal of International Economics, Elsevier, vol. 72(2), pages 336-365, July.
    7. Bruce A. Blonigen & Lionel Fontagné & Nicholas Sly & Farid Toubal, 2012. "Cherries for Sale: Export Networks and the Incidence of Cross-Border M&A," NBER Working Papers 18414, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Cooray, Arusha & Jha, Chandan Kumar & Panda, Bibhudutta, 2023. "Corruption and assortative matching of partners in international trade," European Journal of Political Economy, Elsevier, vol. 77(C).

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