International Trade and Propagation of Merger Waves
71 Pages Posted: 20 Apr 2017 Last revised: 14 Aug 2020
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: Suggested Citation