The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions
Working Paper Series CRENoS, 2013/08
Posted: 29 May 2013
Date Written: April 2013
The paper explores the concurrent effects of cultural, political, and spatial distances on M&A flows occurring between any two countries belonging to the whole European Union (27 States) or to the European Neighbors Group (16 States) over the period 2000-2011. By employing zero-inflated negative binomial specifications, entailing both a binary and count process, we adequately model the two different mechanisms which may generate zero observations in the cross-border bilateral deals. Zeros may be due to either the lack of any transactions or unsuccessful negotiations. We find robust evidence that the multidimensional distance between two countries negatively affects the probability that they will engage in M&A deals; while the recurrence rate of these deals is positively related to population, gross domestic product, and technological capital; but negatively related to geographical distance.
Keywords: cross-border M&As, cultural and political distances, geographical distance, European Union, European neighboring countries, zero-inflated models
JEL Classification: F23, G34, C31
Suggested Citation: Suggested Citation