Cross-border mergers and acquisitions and European integration

Abstract

"Cross-border mergers and acquisitions activities (M&As) sharply increased over the last two decades, partly as a result of financial liberalization policies, government policies and regional agreements. In this paper, we identify some of the main forces driving M&As, using a unique database on bilateral cross-border M&As at the sectoral level (in manufacturing and services) over the period 1985-2004. The key empirical findings are: (1) EMU helped the restructuring of capital within the same sector of manufacturing activity among euro area firms; (2) joining the EU favoured both horizontal and vertical mergers; (3) policy-makers can help attract capital by reducing the corporate tax rates and the degree of product market regulations and by improving the country's financial systems; (4) the service industry has not yet fully benefited from European integration because the level of protection and barriers to entry in the services sector act as a strong deterrent to cross-border M&As in services." Copyright (c) CEPR, CES, MSH, 2009.

On the equivalence of location choice models: Conditional logit, nested logit and Poisson

“…(1) and (9). This correspondence among the three models lies at the heart of Observation 5, which extends the GFW result to the nested logit case with a single outside option.…”

“…Here, the responsiveness of the aggregate firm number is due to the effect on the decisions 9 As in the Poisson and conditional logit models, the predicted total number of firms among the J regions at the estimated coefficients and actual data corresponds to the observed total: E(n|β,δ,λ) = N . …”

Tax Aspects of Mergers and Cross-Border Mergers

“…There are very unique papers on cross-border mergers such as paper on cross-border mergers and acquisitions concerning financial and institutional forces (Coeurdacier, 2009) or paper assessing the impact of the main forces driving cross-border mergers, where a unique database for 10 acquiring manufacturing sectors and 10 acquiring service sectors located in 21 deferent countries targeting foreign assets in 31 deferent 26 host countries (over the 1985 -2004 period) were constructed (Oestreicher 2010).…”

Determinants of Cross-Border Mergers and Acquisitions: A Comprehensive Review and Future Direction

“…Following this trend, consolidation among industries and regions has also uplifted the worldwide M&A market (Shimizu et al, 2004). Whereas, the 20th Century market for corporate control activities has been largely induced by significant economic initiatives such as globalization, deregulation, financial liberalization policies, government policies, regional agreements, elimination of bureaucrat hurdles, technological development, new markets, new international trade and investment agreements, trade liberalization in developed markets, easy of foreign entry and ownership restrictions, cross-country trade linkages, integration of global financial and product markets, faster communication of ideas, greater integration of capital markets, bullish managerial and investor sentiment, establishment of international accounting standards and shareholding systems, corporate governance and capital market development (e.g., Alexandridis et al, 2012;Coeurdacier, De Santis, & Aviat, 2009;Conklin, 2005;Dos Santos, Errunza, & Miller, 2008;Francis et al, 2008;Gilroy & Lukas, 2006;Goergen, Martynova, & Renneboog, 2005;Lévy, 2007;Makaew, 2012;Sinkovics, Zagelmeyer, & Kusstatscher, 2011;Sorensen, 2000;Stiglitz, 2004;Teece, 2010). Interestingly, emerging markets have reported substantial progress in terms of economic growth, inbound and outbound investment/acquisitions deals and faster development in communications sector due to the recent amendments relating to institutional laws that answer foreign investment, corporate control and acquisition patterns, especially in countries like China and India (Chari, Ouimet, & Tesar, 2010).…”