Network Determinants of Cross-Border Merger and Acquisition Decisions

Author/Editor:

Tatiana Didier ; Sebastian Herrador ; Magali Pinat

Publication Date:

December 4, 2019

Electronic Access:

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Summary:

This paper assesses whether cross-border M&A decisions exhibit network effects. We estimate exponential random graph models (ERGM) and temporal exponential random graph models (TERGM) to evaluate the determinants of cross-country M&A investments at the sectoral level. The results show that transitivity matters: a country is more likely to invest in a new destination if one of its existing partners has already made some investments there. In line with the literature on export platforms and informational barriers, we find a sizable impact of third country effects on the creation of new investments. This effect is sizable and larger than some of the more traditional M&A determinants, such as trade openness.

Series:

Working Paper No. 19/264

Subject:

English

Publication Date:

December 4, 2019

ISBN/ISSN:

9781513512556/1018-5941

Stock No:

WPIEA2019264

Format:

Paper

Pages:

43

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