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Where do Creditor Rights Matter? Creditor Rights, Political Constraints, and Cross-Border M&A Activity

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  • Martin Gassebner
  • Pierre-Guillaume Méon

Abstract

In this paper, we evaluate the impact of creditor rights and political risk on both the number and the value of cross-border M&A flows in a gravity model using a negative binomial model and Heckman’s two-stage selection model, respectively. Our results confirm that creditor-friendly rules and political risk decrease M&A inflows. The impact of formal legal rules is, however, almost entirely driven by politically stable countries, where those rules can be expected to hold. De jure rules therefore only matter where political stability is achieved.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-019.RS.

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Length: 33 p.
Date of creation: 2010
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:10-019

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Keywords: Mergers and acquisitions; multinational firms; creditor rights; political risk; gravity model.;

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Cited by:
  1. Hernandez, Diego & Rudolph, Alexandra, 2011. "Modern Day Slavery: What Drives Human Trafficking in Europe?," Proceedings of the German Development Economics Conference, Berlin 2011 83, Verein für Socialpolitik, Research Committee Development Economics.
  2. Diego Hernandez & Alexandra Rudolph, 2011. "Modern Day Slavery: What Drives Human Trafficking in Europe?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 97, Courant Research Centre PEG, revised 23 Nov 2011.

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