Cross-Border Mergers & Acquisitions and the Role of Trade Costs

University of Nottingham Research Paper Series No. 2005/17

28 Pages Posted: 4 Aug 2005

See all articles by Alexander Hijzen

Alexander Hijzen

Organization for Economic Co-Operation and Development (OECD)

Holger Görg

University of Kiel; Kiel Institute for the World Economy

Miriam Manchin

University College London; Centro Studi Luca d'Agliano

Multiple version iconThere are 2 versions of this paper

Date Written: 2005

Abstract

Cross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in both the number and the value of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether distance and trade policy barriers affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument.

Keywords: Mergers and acquisitions, international trade, trade costs, gravity, FDI

JEL Classification: F02, F15, F21, F23

Suggested Citation

Hijzen, Alexander and Gorg, Holger and Manchin, Miriam, Cross-Border Mergers & Acquisitions and the Role of Trade Costs (2005). Available at SSRN: https://ssrn.com/abstract=765106 or http://dx.doi.org/10.2139/ssrn.765106

Alexander Hijzen (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Holger Gorg

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Miriam Manchin

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Centro Studi Luca d'Agliano ( email )

Via Conservatorio 7
Milan, 20122
Italy

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