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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. Fusions et acquisitions transfrontalières dans le secteur des services : le rôle de la politique et de la structure industrielle. Ce mémoire explore le rôle de la politique et de la structure économique dans la détermination des fusions et acquisitions (F&A) dans les secteurs de services. L’analyse est fondée sur des données sur les flux bilatéraux de F&A, et sur une nouvelle base de données contenant de l’information sur les politiques de barrières à ces activités. Les politiques de restriction sur l’investissement réduisent la probabilité d’influx de F&A, compte tenu des frictions bilatérales et de la géographie. Cet effet négatif est cependant mitigé dans des pays où la part du secteur manufacturier est relativement importante, et (à un moindre degré) celle des services dans le PIB. Le même résultat tient pour le nombre d’accords de F&A conclus. Les résultats sont robustes en tenant compte de l’endogénéité potentielle des politiques de restriction. Les résultats montrent que l’impact de la politique dépend de l’état en question et est relié à la composition du PIB de l’économie ciblée.

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/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1470-1501, November.
  • Handle: RePEc:wly:canjec:v:49:y:2016:i:4:p:1470-1501
    DOI: 10.1111/caje.12241
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    Cited by:

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    2. Samira Rousselière & Gaëlle Petit & Thomas Coisnon & Anne Musson & Damien Rousselière, 2022. "A few drinks behind—Alcohol price and income elasticities in Europe: A microeconometric note," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 301-315, February.
    3. Tamar Khachaturian & Sarah Oliver, 2023. "Intangible trade: Understanding the relationship between trade barriers and mode of supply in services sectors," The World Economy, Wiley Blackwell, vol. 46(5), pages 1189-1234, May.
    4. Coisnon, Thomas & Rousselière, Damien & Rousselière, Samira, 2018. "Information on biodiversity and environmental behaviors: a European study of individual and institutional drivers to adopt sustainable gardening practices," Working Papers 272611, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    5. World Bank Group, 2017. "Investment Policy and Promotion Diagnostics and Tools," World Bank Publications - Reports 28281, The World Bank Group.
    6. Bai, Ye & Girma, Sourafel & Riaño, Alejandro, 2024. "Corporate acquisitions and firm-level uncertainty: Domestic versus cross-border deals," Journal of International Money and Finance, Elsevier, vol. 140(C).
    7. Borchert,Ingo & Magdeleine,Joscelyn & Marchetti,Juan A. & Mattoo,Aaditya, 2020. "The Evolution of Services Trade Policy Since the Great Recession," Policy Research Working Paper Series 9265, The World Bank.
    8. Andre Jungmittag & Robert Marschinski, 2023. "Service trade restrictiveness and foreign direct investment—Evidence from greenfield FDI in business services," The World Economy, Wiley Blackwell, vol. 46(6), pages 1711-1758, June.

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    JEL classification:

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

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