Cross-Border Mergers & Acquisitions and the Role of Trade Costs

Holger Görg (), Alexander Hijzen () and Miriam Manchin ()

No 6397, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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.

Keywords: FDI; gravity; mergers and acquisitions; trade costs (search for similar items in EconPapers)
JEL-codes: F02 F15 F21 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-int
Date: 2007-07
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