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The Determinants of Cross-border M&As : the Role of Institutions and Financial Development in Gravity Model

Author

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  • Hea-Jung Hyun

    (Korea Institute for International Economic Polcy)

  • Hyuk Hwang Kim

Abstract

This paper examines the macroeconomic determinants of cross border M&As. Using a panel data set of bilateral M&A deal values for 101 countries and 17 years ranging from 1989 to 2005, we investigate both home and host country factors that may play an important role in determining the size and direction of M&A flows. Overall, the empirical results suggest that legal and institutional quality and financial market development increase M&A volume across countries. The significant effect of institutions however, may disappear for transactions between countries of the similar stage of the development.

Suggested Citation

  • Hea-Jung Hyun & Hyuk Hwang Kim, 2007. "The Determinants of Cross-border M&As : the Role of Institutions and Financial Development in Gravity Model," Finance Working Papers 21934, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:21934
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    More about this item

    Keywords

    Cross-border M&A; Quality of Institutions; Financial Market Development; economic integration; Tobit Model;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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