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Cross-border mergers and acquisitions in services: The role of policy and industrial structure

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  • Alessandro Barattieri
  • Ingo Borchert
  • Aaditya Mattoo

Abstract

This paper explores the role of policy and economic structure in determining international mergers and acquisitions (M&A) in services sectors. The analysis is based on bilateral sectoral M&A flow data and detailed information on policy barriers from a new database. Restrictive investment policies are found to reduce the probability of M&A inflows, controlling for bilateral frictions such as geography. This negative effect, however, is mitigated in countries with relatively large shares of manufacturing and (to a lesser extent) services in GDP. The same result holds for the number of M&A deals concluded. Findings are robust to accounting for the potential endogeneity of policy restrictiveness. The evidence suggests that the impact of policy is state-dependent and related to the composition of GDP in the target economy.

Suggested Citation

  • Alessandro Barattieri & Ingo Borchert & Aaditya Mattoo, 2016. "Cross-border mergers and acquisitions in services: The role of policy and industrial structure," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1470-1501, November.
  • Handle: RePEc:cje:issued:v:49:y:2016:i:4:p:1470-1501
    DOI: 10.1111/caje.12241
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    4. Andre Jungmittag & Robert Marschinski, 2020. "Service Trade Restrictiveness and Foreign Direct Investment - Evidence from Greenfield FDI in Business Services," JRC Working Papers JRC122116, Joint Research Centre (Seville site).

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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