Extending Industry Specialization Through Cross-Border Acquisitions

58 Pages Posted: 21 Nov 2016

See all articles by Laurent Frésard

Laurent Frésard

University of Lugano; Swiss Finance Institute

Ulrich Hege

Toulouse School of Economics; European Corporate Governance Institute (ECGI)

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

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Date Written: November 2016

Abstract

We investigate the role of industry specialization in horizontal cross-border mergers and acquisitions. We find that acquirers from more specialized industries in a country are more likely to buy foreign targets in countries that are less specialized in these same industries. The role of industry specialization in foreign acquisitions is more prevalent when contracting inefficiencies and exporting costs limit arms' length relationships. The economic gains in cross-border deals are larger when specialized acquirers purchase assets in less specialized industries. These results are consistent with an internalization motive for foreign acquisitions, through which acquirers can apply localized intangibles on foreign assets.

Suggested Citation

Frésard, Laurent and Hege, Ulrich and Phillips, Gordon M., Extending Industry Specialization Through Cross-Border Acquisitions (November 2016). NBER Working Paper No. w22848, Available at SSRN: https://ssrn.com/abstract=2873321

Laurent Frésard (Contact Author)

University of Lugano ( email )

Lugano, 900
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Ulrich Hege

Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France
+33 5 61 12 86 01 (Phone)

HOME PAGE: http://https://www.tse-fr.eu/people/ulrich-hege

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

Gordon M. Phillips

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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