Network Determinants of Cross-Border Merger and Acquisition Decisions

Tatiana Didier (tdidier@worldbank.org), Sebastian Herrador and Magali Pinat

No 2019/264, IMF Working Papers from International Monetary Fund

Abstract: This paper assesses whether cross-border M&A decisions exhibit network effects. We estimate exponential random graph models (ERGM) and temporal exponential random graph models (TERGM) to evaluate the determinants of cross-country M&A investments at the sectoral level. The results show that transitivity matters: a country is more likely to invest in a new destination if one of its existing partners has already made some investments there. In line with the literature on export platforms and informational barriers, we find a sizable impact of third country effects on the creation of new investments. This effect is sizable and larger than some of the more traditional M&A determinants, such as trade openness.

Keywords: WP; primary sector; Cross-Border Merger and Acquisition; Networks; Informational Effect.; trade openness; ERGM estimation methodology; M&A investment; M&A determinant; trade solution; targeted firm; Comparative advantage; Manufacturing; Trade balance; Exports; Civil society; Global (search for similar items in EconPapers)
Pages: 43
Date: 2019-12-04
New Economics Papers: this item is included in nep-int and nep-ore
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