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Does Geography Play a Role in Domestic Takeovers? Theory and Finnish Micro-level Evidence

Author

Listed:
  • Petri Böckerman

    (Labour Institute for Economic Research)

  • Eero Lehto

    (Labour Institute for Economic Research)

Abstract

This paper explores domestic mergers and acquisitions (M&As) from the regional perspective. The Finnish firm-level evidence reveals that geographical closeness matters a lot for M&As within a single country. Thus, a great number of domestic M&As occur within narrowly defined regions. Interestingly, domestic M&As reinforce the core-periphery dimension. The results from matched firm-level data show that the strong ability by an acquiring company to monitor the target (measured by the knowledge embodied in human capital) is able to support M&As that occur across distant locations.

Suggested Citation

  • Petri Böckerman & Eero Lehto, 2005. "Does Geography Play a Role in Domestic Takeovers? Theory and Finnish Micro-level Evidence," Urban/Regional 0505003, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0505003
    Note: Type of Document - pdf; pages: 33
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    References listed on IDEAS

    as
    1. Ashcroft, Brian & Coppins, Barbara & Raeside, Robert, 1994. "The Regional Dimension of Takeover Activity in the United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(2), pages 163-175, May.
    2. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    3. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    4. Bronwyn H. Hall, 1988. "The Effect of Takeover Activity on Corporate Research and Development," NBER Chapters,in: Corporate Takeovers: Causes and Consequences, pages 69-100 National Bureau of Economic Research, Inc.
    5. John DiNardo & Justin L. Tobias, 2001. "Nonparametric Density and Regression Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 11-28, Fall.
    6. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    7. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    8. Wolfgang Keller, 2002. "Geographic Localization of International Technology Diffusion," American Economic Review, American Economic Association, vol. 92(1), pages 120-142, March.
    9. Levy, David T & Reitzes, James D, 1992. "Anticompetitive Effects of Mergers in Markets with Localized Competition," Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 427-440, April.
    10. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
    11. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
    12. Matsushima, Noriaki, 2001. "Horizontal Mergers and Merger Waves in a Location Model," Australian Economic Papers, Wiley Blackwell, vol. 40(3), pages 263-286, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    mergers; acquisitions; monitoring; agglomeration;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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