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Horizontal, Vertical, and Conglomerate FDI: Evidence from Cross Border Acquisitions

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By using data on cross-border acquisitions (CBAs), this paper explores the distribution of the strategies pursued when multinational enterprizes integrate a foreign subsidiary into their organisational structure. Based on a measure of vertical relatedness, each of the 165,000 acquisitions in our sample covering 31 source and 58 host countries can be classified as horizontal, vertical, or conglomerate. Three novel features of CBAs are highlighted. First, horizontal and vertical CBAs are relatively stable over time. Second, substantial parts of CBAs involve conglomerate acquisitions. Third, the wave-like growth of CBAs arises primarily from changes in conglomerate activity, which responds to international valuation differences between financial markets.

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  • Nils Herger & Steve McCorriston, 2014. "Horizontal, Vertical, and Conglomerate FDI: Evidence from Cross Border Acquisitions," Working Papers 14.02, Swiss National Bank, Study Center Gerzensee.
    • Handle: RePEc:szg:worpap:1402
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    Cited by:

    1. Ronald B. Davies & Rodolphe Desbordes & Anna Ray, 2015. "Greenfield versus Merger & Acquisition FDI: Same Wine, Different Bottles?," Working Papers 201503, School of Economics, University College Dublin.
    2. Ronald B. Davies & Rodolphe Desbordes & Anna Ray, 2018. "Greenfield versus merger and acquisition FDI: Same wine, different bottles?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1151-1190, November.
    3. Ray, Anna, 2016. "Expanding Multinationals - Conglomerate M&A and Activity-Basket Proximity," Conference papers 332693, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Alexander Guschanski & Özlem Onaran, 2018. "Determinants of the Wage Share: A Cross-country Comparison Using Sectoral Data," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 19(02), pages 44-54, July.

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