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Location Choices of Multinational Firms: The Case of Mergers and Acquisitions

  • Bertrand, Olivier

    ()

    (Toulouse School of Economics)

  • Mucchielli , Jean-Louis

    ()

    (University of Paris 1 Panthéon - Sorbonne)

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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Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 22 (2007)
Issue (Month): ()
Pages: 181-209

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Handle: RePEc:ris:integr:0391
Contact details of provider: Web page: http://www.e-jei.org/

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