International Mergers with Financially Constrained Owners

Aron Berg, Pehr-Johan Norbäck and Lars Persson

No 927, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper proposes a cross-border M&A model with financially constrained owners in which the identity of the buyer and seller can be determined. We show that policies blocking foreign acquisitions to protect the domestic industry can be counterproductive. Foreign acquisition can increase the domestic owner’s investment in growth industries by reducing their financial restrictions. This calls for a ”financial” efficiency defense in the merger law. We also show that cross-border M&As are not only driven by effects on the merged entity, but also driven by the seller’s alternative investment opportunities.

Keywords: Investment Liberalization; Mergers & Acquisitions; Corporate Governance; Ownership (search for similar items in EconPapers)
JEL-codes: F23 K21 L13 O12 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-09-24
New Economics Papers: this item is included in nep-com and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0927

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