Cross‐Border Merger & Acquisition Activity and Revealed Comparative Advantage in Manufacturing Industries

30 Pages Posted: 10 Jan 2013

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Harry Garretsen

University of Groningen

Charles van Marrewijk

Utrecht University - School of Economics

Arjen van Witteloostuijn

University of Groningen - Faculty of Economics and Business

Date Written: Spring 2013

Abstract

We estimate an important implication of oligopolistic international trade modeling for the predicted pattern of cross‐border mergers and acquisitions (M&As). Our core argument is that cross‐border M&As are, among other factors, driven by cross‐country differences in comparative advantage. We find strong evidence that acquiring firms operate in industries with a comparative advantage. We also report (less pronounced) evidence that this holds for target firms as well. We therefore add another explanation, rooted in international economics, to the industrial organization literature on M&As that emphasizes efficiency and strategic motives.

Suggested Citation

Brakman, Steven and Garretsen, Harry and van Marrewijk, Charles and van Witteloostuijn, Arjen, Cross‐Border Merger & Acquisition Activity and Revealed Comparative Advantage in Manufacturing Industries (Spring 2013). Journal of Economics & Management Strategy, Vol. 22, Issue 1, pp. 28-57, 2013. Available at SSRN: https://ssrn.com/abstract=2198768 or http://dx.doi.org/10.1111/jems.12007

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Harry Garretsen

University of Groningen ( email )

Charles Van Marrewijk

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
*31-(0)30-2539810 (Phone)

HOME PAGE: http://www.charlesvanmarrewijk.nl

Arjen Van Witteloostuijn

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

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