Network Determinants of Cross-Border Merger and Acquisition Decisions
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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. 2019/264
Subject:
Civil society Comparative advantage Economic sectors Exports International trade Manufacturing Trade balance
English
Publication Date:
December 4, 2019
ISBN/ISSN:
9781513512556/1018-5941
Stock No:
WPIEA2019264
Pages:
43
Please address any questions about this title to publications@imf.org