Investment Liberalization - Who Benefits from Cross-Border Mergers & Acquisitions?

Pehr-Johan Norbäck and Lars Persson

No 569, Working Paper Series from Research Institute of Industrial Economics

Abstract: Investment liberalizing countries are often concerned that cross-border mergers & acquisitions might have an adverse effect on domestic firms and benefit multinational enterprises (MNEs). However, given that domestic assets are sufficiently scarce, we identify a preemption effect and an asset complementarity effect which imply that the acquisition price is substantially higher than the domestic seller's reservation price. The preemption effect also implies that the seller might capture some of the MNEs' initial rents. Moreover, other policies used in times of investment liberalization, such as restructuring, are explained through their effect on the value of the domestic assets.

Keywords: Investment Liberalization; FDI; Mergers & Acquisitions; Restructuring (search for similar items in EconPapers)
JEL-codes: F02 F23 K21 L13 L33 O12 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2001-12-19
New Economics Papers: this item is included in nep-ifn, nep-law and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0569

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