Unlocking the Value of Cross-Border Mergers and Acquisitions

Steven Brakman (), Gus Garita, Harry Garretsen, Charles van Marrewijk and Charles van Marrewijk
Authors registered in the RePEc Author Service: Charles van Marrewijk

No 2294, CESifo Working Paper Series from CESifo

Abstract: Most FDI takes place between the developed countries, which suggests that the market-seeking motive is important for understanding FDI. However, given the stylized fact that trade barriers (e.g. transportation costs and financial barriers) have declined over the past 20 years, models that aim to explain market-seeking FDI tend to predict a decline in FDI. Neary (2008) offers two explanations for this puzzle: (1) the export platform motive (where firms gain access to an integrated market by investing in one of the “integrated” countries); (2) Neary’s (2007) GOLE model, which explains cross-border mergers and acquisitions (this model is of interest since most FDI comes in the form of M&As). By using a gravity framework, where we also deal with the “zero gravity problem”, we confirm the predictions of the GOLE model.

Keywords: cross-border M&As; financial openness; economic integration (search for similar items in EconPapers)
JEL-codes: F10 F12 F15 F36 F37 F41 G34 L13 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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