International Trade and Propagation of Merger Waves

71 Pages Posted: 20 Apr 2017 Last revised: 14 Aug 2020

See all articles by Muhammad Farooq Ahmad

Muhammad Farooq Ahmad

SKEMA Business School – Université Côte d'Azur

Eric de Bodt


Jarrad Harford

University of Washington; European Corporate Governance Institute (ECGI)

Date Written: November 18, 2017


Cross-border merger activity is growing in importance. We map the global trade network each year from 1989 to 2016 and compare it to cross-border and domestic merger activity. Trade-weighted merger activity in trading partner countries has statistically and economically significant explanatory power for the likelihood a given country will be in a merger wave state, at both the cross-border and domestic levels, even controlling for its own lagged merger activity. The role of trade as a channel for transmitting merger waves is confirmed using import tariff cuts and trade sanctions as instruments to mitigate endogeneity. Overall, the full trade network helps our understanding of merger waves and how merger activity propagates across borders.

Keywords: International Trade Merger Waves

JEL Classification: G34

Suggested Citation

Ahmad, Muhammad Farooq and de Bodt, Eric and Harford, Jarrad, International Trade and Propagation of Merger Waves (November 18, 2017). Available at SSRN: or

Muhammad Farooq Ahmad

SKEMA Business School – Université Côte d'Azur ( email )

Campus de Lille, Avenue Willy Brandt,
Lille, 59777


Eric De Bodt (Contact Author)

NHH ( email )

Helleveien 30
Bergen, NO-5045

Jarrad Harford

University of Washington ( email )

Box 353226
Seattle, WA 98195-3226
United States
206-543-4796 (Phone)
206-543-7472 (Fax)


European Corporate Governance Institute (ECGI) ( email )

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

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