Working Paper: NBER ID: w26843
Authors: Anusha Chari
Abstract: This paper documents a set of stylized facts about recent trends in cross-border M&A (CBMA) activity around the world. The facts focus on key features of CBMA such as (i) the magnitude; (ii) how it varies across industries and locations; (iii) how it compares to levels of greenfield FDI over time; (iv) horizontal (market access) versus vertical (integrating supply chains) transactions; (v) the mode of financing; (vi) diversifying transactions versus those in the same industry; (vii) patterns of control acquisition; and (viii) strategic versus financially motivated transactions. The paper also examines whether the nature of cross-border M&A activity differs across developed and emerging markets. Next, it considers the incentives for firms to buy firms in other countries and to sell divisions to foreign buyers and examines the evidence about post-acquisition outcomes. The paper concludes with a discussion of policy challenges that confront governments as they weigh the balance of national security concerns against a desire to increase foreign investment in their economies.
Keywords: cross-border mergers and acquisitions; foreign direct investment; market access; emerging markets; policy implications
JEL Codes: F2; F23; F3; G34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| CBMAs (O22) | FDI flows (F21) |
| CBMAs (O22) | employment (J68) |
| CBMAs (O22) | investment (G31) |
| CBMAs (O22) | productivity (O49) |
| CBMAs (O22) | joint returns for acquiring firms (G34) |
| CBMAs (O22) | nature of CBMA activity (E16) |
| emerging market acquirers (G34) | majority control of targets (G34) |
| developed market acquirers (G34) | varied approach to control acquisition (C70) |