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Cross-border mergers and acquisitions and the role of trade costs

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

No 242, European Economy - Economic Papers 2008 - 2015 from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

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 both the number and the value of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether distance and trade policy barriers 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: mergers and acquisitions; international trade; trade costs; gravity; FDI; Hijzen; Görg; Manchin (search for similar items in EconPapers)
Pages: 33 pages
Date: 2006-02
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Related works:
Journal Article: Cross-border mergers and acquisitions and the role of trade costs (2008) Downloads
Working Paper: Cross-Border Mergers & Acquisitions and the Role of Trade Costs (2007) Downloads
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