Location Choices of Multinational Firms: The Case of Mergers and Acquisitions

37 Pages Posted: 15 Jun 2004

See all articles by Olivier Bertrand

Olivier Bertrand

Université Paris I Panthéon-Sorbonne - TEAM

Jean-Louis Mucchielli

Université Paris I Pantheon-Sorbonne

Habib Zitouna

Université Paris I Panthéon-Sorbonne - TEAM

Date Written: April 2004

Abstract

This article examines the location choices of cross-border Mergers and Acquisitions (M&A) between OECD members' firms in the 1990's. In addition to traditional determinants of FDI, we estimate the impact of specific factors affecting the M&A location pattern. Two distinct econometric methods are implemented: the conditional logit and the count model (Poisson or negative binomial model). In spite of the use of alternative econometric methods, we find that the supply of target firms (captured by market capitalization and privatization activity) constrains the location of M&A. However, is it not the only determinant of location: market size, labor costs, market access and financial openness play a positive and significant role on the M&A location. A bandwagon effect is also observed. In the opposite, the corporate tax rate and the productivity decrease the probability to attract M&A. Cultural and geographic distances and differences in legal rules also exert a negative significant impact on M&A strategies. Only the ownership structure has contrasted results.

Keywords: Foreign direct investment, merger and acquisition, location, conditional

JEL Classification: F23, L1, R3

Suggested Citation

Bertrand, Olivier and Mucchielli, Jean-Louis and Zitouna, Habib, Location Choices of Multinational Firms: The Case of Mergers and Acquisitions (April 2004). HWWA Discussion Paper No. 274. Available at SSRN: https://ssrn.com/abstract=556206 or http://dx.doi.org/10.2139/ssrn.556206

Olivier Bertrand (Contact Author)

Université Paris I Panthéon-Sorbonne - TEAM ( email )

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France

Jean-Louis Mucchielli

Université Paris I Pantheon-Sorbonne ( email )

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France
+33 1 4407 8267 (Phone)
+33 1 4407 8267 (Fax)

Habib Zitouna

Université Paris I Panthéon-Sorbonne - TEAM ( email )

106-112 boulevard de l'hôpital
Cedex 13 Paris, P75647
France

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