Partial ownership and cross-border mergers

Frank Stähler

Journal of Economics, 2014, vol. 111, issue 3, 209-237

Abstract: Partial ownership can be used as a screening device by a foreign firm which wants to merge with a local firm whose productivity is private information. As partial ownership is confined to sharing future merger profits, it cannot achieve complete separation in all cases but improves expected merger gains also in an equilibrium which is not fully separating. Without partial ownership, the foreign firm potentially discriminates against high productivities. In a pooling equilibrium with partial ownership, however, it will potentially discriminate against intermediate productivities. Copyright Springer-Verlag Wien 2014

Keywords: Partial ownership; Merger; Multinational firms; Foreign direct investment; Asymmetric information; D82; F23 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:111:y:2014:i:3:p:209-237

DOI: 10.1007/s00712-012-0327-z

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