Cross-border Mergers and Acquisitions and the Role of Trade Costs
- ISBN-10
- 9279011839
- ISBN-13
- 9789279011832
- Pages
- 33
- Language
- English
- Published
- 2006
- Publisher
- European Commission, Directorate-General for Economic and Financial Affairs
- Authors
- Alexander Hijzen, Holger Görg, Miriam Manchin
Description
Cross-border mergers and acquisitions (Mamp;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 Mamp;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.
