Location Choices of Multinational Firms : The Case of Mergers and Acquisitions
AbstractThis 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 (Poisson or negative binomial model). In spite of the use of alternative econometric methods, we find that the supply of target firms (captured by market capitalization and privatization activity) constrains the location of M&A. However, is it not the only determinant of location: market size, labor costs, market access and financial openness play a positive and significant role on 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 and differences in legal rules also exert a negative significant impact on M&A strategies. Only the ownership structure has contrasted results. --
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Bibliographic InfoPaper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 274.
Date of creation: 2004
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Web page: http://www.econstor.eu/handle/10419/20
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Foreign Direct Investment; Merger and Acquisition; Location; conditional logit; count model;
Other versions of this item:
- Bertrand, Olivier & Mucchielli , Jean-Louis, 2007. "Location Choices of Multinational Firms: The Case of Mergers and Acquisitions," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 181-209.
- Olivier Bertrand & Jean-Louis Mucchielli & Habib Zitouna, 2004. "Location Choices Of Multinational Firms: The Case Of Mergers And Acquisitions," Royal Economic Society Annual Conference 2004 124, Royal Economic Society.
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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