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

29 Pages Posted: 9 Jun 2016

See all articles by Maria Chiara Di Guardo

Maria 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: June 2016

Abstract

This paper explores the concurrent effects of cultural, political, and spatial distances on mergers and acquisitions (M&A) flows occurring between any two countries belonging to the whole European Union (27 States) or to the European Neighbours group (16 States) over the period 2000–11. In the econometric analysis, based on zero‐inflated models, we simultaneously estimate the probability of engaging in a cross‐border M&A and the intensity of the deals. This allows us to adequately model the two different mechanisms which may result in the absence of deals in the cross‐border bilateral M&A transactions. The absence of deals may be due to either the lack of any transactions or unsuccessful negotiations. Taking into account the effect of population, gross domestic product, technological capital, financial conditions and quality of the institutions, we find robust evidence that the multi‐dimensional distance between two countries negatively affects both the probability and the intensity of M&A deals.

Suggested Citation

Di Guardo, Maria Chiara and Marrocu, Emanuela and Paci, Raffaele, The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions (June 2016). The World Economy, Vol. 39, Issue 6, pp. 824-852, 2016. Available at SSRN: https://ssrn.com/abstract=2792428 or http://dx.doi.org/10.1111/twec.12275

Maria Chiara Di Guardo (Contact Author)

Universita di Cagliari

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

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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