Cross-border mergers and acquisitions and inter-urban gravity

Banri Ito

MPRA Paper from University Library of Munich, Germany

Abstract: Cross-border mergers and acquisitions (M&As) have grown rapidly in recent years and are a major part of foreign direct investment (FDI). However, M&A distribution is highly skewed, with most of the activity concentrated in certain countries and even in certain cities. Only a handful of cities account for most M&As. Unlike many previous studies that have relied on a gravity model approach using the bilateral volume of FDI, this study examines the determinants of cross-border M&As by applying an FDI gravity model to inter-city investment flows in the world. The empirical results, which are based on panel data of M&A flows across 44 major cities in the world from 2010 to 2017, show that besides the basic attributes used in conventional gravity models, such as market size and distance between origin city and destination city, urban-specific attributes such as the agglomeration of the world’s top-ranked firms and the number of foreign residents have a statistically significant explanatory power for inward M&As.

Keywords: Gravity model; M&As; border effects; inter-city investment; agglomeration (search for similar items in EconPapers)
JEL-codes: F14 F21 F23 R12 (search for similar items in EconPapers)
Date: 2020-11-16
New Economics Papers: this item is included in nep-geo and nep-int
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https://mpra.ub.uni-muenchen.de/119129/1/MPRA_paper_103985.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:103985

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