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Cross-border mergers and acquisitions and the role of trade costs - Alexander Hijzen, Holger Görg and Miriam Manchin

Alexander Hijzen (GEP, University of Nottingham), Holger Görg (GEP, University of Nottingham and DIW Berlin) and Miriam Manchin (Tinbergen Institute, Rotterdam University)

Cross-border mergers and acquisitions and the role of trade costs - Alexander Hijzen, Holger Görg and Miriam Manchinpdf(473 kB) Choose translations of the previous link 

Cross-border mergers and acquisitions (M&Amp;As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in both the number and the value of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&Amp;As and investigate whether distance and trade policy barriers 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.

(European Economy. Economic Papers. 242. February 2006. Brussels. 33pp. Tab. Free.)

KC-AI-06-242-EN-C (online)
ISBN 92-79-01183-9 (online)
ISSN 1725-3187

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