The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions

Working Paper Series CRENoS, 2013/08

Posted: 29 May 2013

See all articles by Chiara Di Guardo

Chiara Di Guardo

Universita di Cagliari

Emanuela Marrocu

Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Raffaele Paci

University of Cagliari - Centre for North South Economic Research (CRENOS)

Date Written: April 2013

Abstract

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

Di Guardo, Chiara and Marrocu, Emanuela and Paci, Raffaele, The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions (April 2013). Working Paper Series CRENoS, 2013/08. Available at SSRN: https://ssrn.com/abstract=2271594 or http://dx.doi.org/10.2139/ssrn.2271594

Chiara Di Guardo

Universita di Cagliari ( email )

Cagliari, 09124
Italy

Emanuela Marrocu

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
ITALY
+39.0706753764 (Phone)
+30.0706753760 (Fax)

Raffaele Paci (Contact Author)

University of Cagliari - Centre for North South Economic Research (CRENOS) ( email )

Viale S. Ignazio, 78
Cagliari I-09123
Italy
+70-6753764 (Phone)
+70-6753760 (Fax)

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