DP6397 Cross-Border Mergers & Acquisitions and the Role of Trade Costs
|Author(s):||Holger Görg, Alexander Hijzen, Miriam Manchin|
|Publication Date:||July 2007|
|Keyword(s):||FDI, gravity, mergers and acquisitions, trade costs|
|JEL(s):||F02, F15, F21, F23|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=6397|
Cross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in the number of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether trade costs affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument.