Location Choices of Multinational Firms: The Case of Mergers and Acquisitions |
Olivier Bertrand, Jean-Louis Mucchielli, Habib Zitouna, |
Toulouse School of Economics University of Paris 1 Panthéon - Sorbonne High School of Economic and Commercial Sciences |
Copyright ©2007 The Journal of Economic Integration |
ABSTRACT |
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This article examines the location choices of cross-border Mergers and Acquisitions (M&A) between OECD members' firms in the 1990's. In addition to traditional determinants of FDI, we estimate the impact of specific factors affecting the M&A location pattern. Two distinct econometric methods are implemented: the conditional logit and the count model. We find that the supply of target firms constrains the location of M&A. However, it is not the only determinant of location: the market size, the labor cost, the market access and the financial openness play a positive and significant role in the M&A location. A bandwagon effect is also observed. In the opposite, the corporate tax rate and the productivity decrease the probability to attract M&A. Cultural and geographic distances as well as differences in legal rules exert a negative significant impact on M&A strategies too. Only the ownership structure has contrasted results. JEL classification:F23, L1, R3 |
Keywords:
Foreign Direct Investment | Merger and Acquisition | Location | Conditional Logit | Count Model
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