Network Determinants of Cross-Border Merger and Acquisition Decisions

By Tatiana Didier, Sebastian Herrador, Magali Pinat

December 4, 2019

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Format: Chicago

Tatiana Didier, Sebastian Herrador, and Magali Pinat. Network Determinants of Cross-Border Merger and Acquisition Decisions, (USA: International Monetary Fund, 2019) accessed December 21, 2024

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.

Subject: Civil society, Comparative advantage, Economic sectors, Exports, International trade, Manufacturing, Trade balance

Keywords: Civil society, Comparative advantage, Cross-Border Merger and Acquisition, ERGM estimation methodology, Exports, Global, Informational Effect., M&A determinant, M&A investment, Manufacturing, Networks, Primary sector, Targeted firm, Trade balance, Trade openness, Trade solution, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/264
Stock No:

WPIEA2019264
ISBN:

9781513512556
ISSN:

1018-5941

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