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Cross-Border Mergers & Acquisitions: The Facts as a Guide for International Economics

  • Steven Brakman
  • Harry Garretsen
  • Charles van Marrewijk

Using a detailed and large data set on cross-border merger and acquisitions we discuss the relationship between theory and observed empirical characteristics:(i) most FDI is in the form of M&As, (ii) firms engaged in M&As seem to be ‘market-seeking’, (iii) M&As come in waves (the most recent wave is still unfolding), (iv) economic integration (international deregulation) stimulated M&As, (v) the size of and inequality between M&As grows over time.Our contention in this chapter is that these stylized facts drive and should drive recent theoretical contributions in the field of international economics that try to understand cross-border mergers and acquisitions. Although some models (notably Neary, 2003) explain a number of the characteristics, a full-fledged model of cross-border M&As that, at least in principle, can deal with all the characteristics is still lacking.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1823.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1823
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  1. FRIDOLFSSON, Sven-Olof & STENNEK, Johan, 1999. "Why mergers reduce profits, and raise share prices: A theory of preemptive mergers," Working Papers 1999018, University of Antwerp, Faculty of Applied Economics.
  2. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and Productivity in International Trade," Boston University - Institute for Economic Development 105, Boston University, Institute for Economic Development.
  3. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2005. "Cross-Border Mergers and Acquisitions: On Revealed Comparative Advantage and Merger Waves," CESifo Working Paper Series 1602, CESifo Group Munich.
  4. J. Peter Neary, 2007. "Cross-Border Mergers as Instruments of Comparative Advantage," Review of Economic Studies, Oxford University Press, vol. 74(4), pages 1229-1257.
  5. Neary, J. Peter, 2009. "Trade costs and foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 207-218, March.
  6. van Marrewijk, Charles, 2006. "International Economics: Theory, application, and policy," OUP Catalogue, Oxford University Press, number 9780199280988.
  7. Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
  8. repec:got:cegedp:34 is not listed on IDEAS
  9. Edward E. Leamer & James Levinsohn, 1994. "International Trade Theory: The Evidence," NBER Working Papers 4940, National Bureau of Economic Research, Inc.
  10. J. Peter Neary, 2002. "Globalisation and market structure," Working Papers 200220, School of Economics, University College Dublin.
  11. J. Peter Neary, 2000. "Monopolistic competition and international trade theory," Working Papers 200025, School of Economics, University College Dublin.
  12. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "The Effects of Mergers: An International Comparison," CIG Working Papers FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  13. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2006. "Comparative advantage, cross-border mergers and merger waves: International economics meets industrial organization," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 7(1), pages 22-26, 04.
  14. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
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