Cherries for Sale: The Incidence and Timing of Cross-border M&A

Bruce Blonigen, Lionel Fontagné, Nicholas Sly and Farid Toubal

Chapter 4 in Foreign Direct Investment, 2019, pp 121-177 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This paper develops a model of cross-border M&A activity that features firm-level productivity shocks and endogenous export activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels that induced them to invest in large export networks several years prior to acquisition, but subsequently experienced a negative productivity shock (i.e., cherries for sale). From the theory we derive a dynamic panel binary choice empirical model to predict cross-border M&A activity, and find strong evidence for our hypotheses connecting the evolution of firm-level productivity to the ultimate targets of cross-border acquisitions using French firm-level data.

Keywords: Foreign Direct Investment; Multinational Enterprises; Mergers and Acquisitions; Greenfield; Trade Policy; Taxation; Spillovers; Offshoring; Wage Inequality; Firm-Specific Assets; Antidumping; Tariff-jumping; Industrial Organization; Ownership-Location-Internalization Theory (search for similar items in EconPapers)
JEL-codes: F02 F13 F6 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Cherries for sale: The incidence and timing of cross-border M&A (2014)
Working Paper: Cherries for sale: The incidence and timing of cross-border M&A (2014)
Working Paper: Cherries for sale: The incidence and timing of cross-border M&A (2014)
Working Paper: Cherries for sale: The incidence and timing of cross-border M&A (2014)
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