IDEAS home Printed from https://ideas.repec.org/p/sca/scaewp/0708.html
   My bibliography  Save this paper

Cross-Border M&A Inflows and the Quality of Institutions: A Cross-Country Panel Data Analysis

Author

Listed:
  • Jung Hur

    () (Department of Economics, National University of Singapore)

  • Rasyad A. Parinduri

    () (Singapore Centre for Applied and Policy Economics (SCAPE) Department of Economics, National University of Singapore)

  • Yohanes E. Riyanto

    () (Department of Economics, National University of Singapore)

Abstract

This paper provides an empirical explanation to the observed disparity in cross-border M&A inflows to developing and developed countries over the last two decades. We show two main results. First, the disparity can be attributed to the difference in the quality of institutions between the two groups of countries. Second, the gain from reforming institutions in developing countries is smaller than that in developed countries. These findings suggest that, with the current speed of institutional reforms in developing countries, the disparity is likely to persist.

Suggested Citation

  • Jung Hur & Rasyad A. Parinduri & Yohanes E. Riyanto, 2007. "Cross-Border M&A Inflows and the Quality of Institutions: A Cross-Country Panel Data Analysis," SCAPE Policy Research Working Paper Series 0708, National University of Singapore, Department of Economics, SCAPE.
  • Handle: RePEc:sca:scaewp:0708
    as

    Download full text from publisher

    File URL: http://www.fas.nus.edu.sg/ecs/pub/wp-scape/0708.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Eichengreen, Barry & Irwin, Douglas A., 1995. "Trade blocs, currency blocs and the reorientation of world trade in the 1930s," Journal of International Economics, Elsevier, vol. 38(1-2), pages 1-24, February.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110-110.
    4. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    5. repec:hrv:faseco:30728046 is not listed on IDEAS
    6. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 7-46, April.
    7. AndrewK. Rose & MarkM. Spiegel, 2007. "Offshore Financial Centres: Parasites or Symbionts?," Economic Journal, Royal Economic Society, vol. 117(523), pages 1310-1335, October.
    8. di Giovanni, Julian, 2005. "What drives capital flows? The case of cross-border M&A activity and financial deepening," Journal of International Economics, Elsevier, pages 127-149.
    9. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    10. Filipe R. Campante & Davin Chor & Quoc-Anh Do, 2009. "Instability And The Incentives For Corruption," Economics and Politics, Wiley Blackwell, vol. 21(1), pages 42-92, March.
    11. Amemiya, Takeshi & MaCurdy, Thomas E, 1986. "Instrumental-Variable Estimation of an Error-Components Model," Econometrica, Econometric Society, vol. 54(4), pages 869-880, July.
    12. Axel Borrmann & Matthias Busse & Silke Neuhaus, 2006. "Institutional Quality and the Gains from Trade," Kyklos, Wiley Blackwell, vol. 59(3), pages 345-368, August.
    13. Simon Evenett, 2004. "The Cross-Border Mergers and Acquisitions Wave of the Late 1990s," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 411-470 National Bureau of Economic Research, Inc.
    14. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351-351.
    15. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    16. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ronald B. Davies & Rodolphe Desbordes & Anna Ray, 2015. "Greenfield versus Merger \& Acquisition FDI: Same Wine, Different Bottles?," The Institute for International Integration Studies Discussion Paper Series iiisdp468, IIIS.
    2. Reddy, Kotapati Srinivasa, 2015. "Revisiting and Reinforcing the Farmers Fox Theory: A Study (Test) of Three Cases in Cross-border Inbound Acquisitions," MPRA Paper 63561, University Library of Munich, Germany, revised 2015.
    3. Mercedes Campi & Marco Duenas & Matteo Barigozzi & Giorgio Fagiolo, 2016. "Do Intellectual Property Rights Influence Cross-Border Mergers and Acquisitions ?," LEM Papers Series 2016/28, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Maria Chiara Di Guardo & Emanuela Marrocu & Raffaele Paci, 2016. "The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions," The World Economy, Wiley Blackwell, vol. 39(6), pages 824-852, June.
    5. Yerrabati, Sridevi & Hawkes, Denise Donna, 2016. "Institutions and Investment in the South and East Asia and Pacific Region: Evidence from Meta-Analysis," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-48.
    6. Reddy, Kotapati Srinivasa, 2015. "Determinants of Cross-border Mergers and Acquisitions: A Comprehensive Review and Future Direction," MPRA Paper 63969, University Library of Munich, Germany, revised 2015.
    7. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    8. Deng, Ping & Yang, Monica, 2015. "Cross-border mergers and acquisitions by emerging market firms: A comparative investigation," International Business Review, Elsevier, vol. 24(1), pages 157-172.
    9. Hawkes, Denise Donna & Yerrabati, Sridevi, 2015. "Institutions and investment in South and East Asia & Pacific region: Evidence from meta-analysis," Economics Discussion Papers 2015-62, Kiel Institute for the World Economy (IfW).
    10. Reddy, Kotapati Srinivasa, 2014. "Institutional Dichotomy and Cross-Border Inbound Acquisitions: A Study of Three Cases," MPRA Paper 64221, University Library of Munich, Germany, revised 2014.
    11. Reddy, Kotapati Srinivasa, 2015. "Why do Cross-border Merger/Acquisition Deals become Delayed, or Unsuccessful? – A Cross-Case Analysis in the Dynamic Industries," MPRA Paper 63940, University Library of Munich, Germany, revised 2015.

    More about this item

    Keywords

    cross-border M&A inflows; quality of institutions; developing and developed countries; pooled-data and panel data analysis; correlated random effects;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sca:scaewp:0708. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/denussg.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.