Where do Creditor Rights Matter? Creditor Rights, Political Constraints, and Cross-Border M&A Activity

Martin Gassebner and Pierre-Guillaume Méon

No 10-019.RS, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: In this paper, we evaluate the impact of creditor rights and political risk on both the number and the value of cross-border M&A flows in a gravity model using a negative binomial model and Heckman’s two-stage selection model, respectively. Our results confirm that creditor-friendly rules and political risk decrease M&A inflows. The impact of formal legal rules is, however, almost entirely driven by politically stable countries, where those rules can be expected to hold. De jure rules therefore only matter where political stability is achieved.

Keywords: Mergers and acquisitions; multinational firms; creditor rights; political risk; gravity model. (search for similar items in EconPapers)
JEL-codes: F23 G18 G34 P16 (search for similar items in EconPapers)
Pages: 33 p.
Date: 2010
New Economics Papers: this item is included in nep-com and nep-pol
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Citations: View citations in EconPapers (3)

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