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Where do Creditor Rights Matter? Creditor Rights, Political Constraints, and Cross-Border M&A Activity

Listed author(s):
  • Martin Gassebner
  • Pierre-Guillaume Méon

In this paper, we evaluate the impact of creditor rights and political risk on both the number and the value of cross-border M&A flows in a gravity model using a negative binomial model and Heckman’s two-stage selection model, respectively. Our results confirm that creditor-friendly rules and political risk decrease M&A inflows. The impact of formal legal rules is, however, almost entirely driven by politically stable countries, where those rules can be expected to hold. De jure rules therefore only matter where political stability is achieved.

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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/54009/1/RePEc_sol_wpaper_10-019.pdf
File Function: RePEc_sol_wpaper_10-019
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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-019.RS.

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Length: 33 p.
Date of creation: 2010
Publication status: Published by:
Handle: RePEc:sol:wpaper:10-019
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