Extending Industry Specialization through Cross-Border Acquisitions

Laurent Frésard, Ulrich Hege and Gordon Phillips

No 22848, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the role of industry specialization in horizontal cross-border mergers and acquisitions. We find that acquirers from more specialized industries in a country are more likely to buy foreign targets in countries that are less specialized in these same industries. The role of industry specialization in foreign acquisitions is more prevalent when contracting inefficiencies and exporting costs limit arms' length relationships. The economic gains in cross-border deals are larger when specialized acquirers purchase assets in less specialized industries. These results are consistent with an internalization motive for foreign acquisitions, through which acquirers can apply localized intangibles on foreign assets.

JEL-codes: D22 D4 D53 G34 L1 L11 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-cfn, nep-ind and nep-int
Note: CF IO
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Published as Laurent Frésard & Ulrich Hege & Gordon Phillips, 2017. "Extending Industry Specialization through Cross-Border Acquisitions," Review of Financial Studies, Society for Financial Studies, vol. 30(5), pages 1539-1582.

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Related works:
Journal Article: Extending Industry Specialization through Cross-Border Acquisitions (2017)
Working Paper: Extending Industry Specialization through Cross-Border Acquisitions (2016)
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