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Cross-border mergers and acquisitions in services : the role of policy and industrial structure, Volume 1
 
Author:Barattieri, Alessandro; Borchert, Ingo; Mattoo, Aaditya; Country:World;
Date Stored:2014/06/04Document Date:2014/06/01
Document Type:Policy Research Working PaperSubTopics:Public Sector Corruption & Anticorruption Measures; Economic Theory & Research; Emerging Markets; Debt Markets; E-Business
Language:EnglishMajor Sector:Industry and trade
Rel. Proj ID:1W-Services Trade Research -- -- P110919;Region:The World Region
Report Number:WPS6905Sub Sectors:Other domestic and international trade
Collection Title:Policy Research working paper ; no. WPS 6905TF No/Name:TF013965-Services Trade and Policy Reform; TF012605-Dissemination of the Services Trade Restrictions Database
Volume No:1  

Summary: This paper presents evidence on the determinants of cross-border mergers and acquisitions in services sectors. It develops a stylized model of mergers and acquisitions that predicts that the incidence of merger and acquisition deals depends, inter alia, on the target economy's size, industrial structure and investment policies, as well as on bilateral transactions costs. These predictions are examined with bilateral merger and acquisition flow data and detailed information on policy barriers from a new database of restrictions on services investment. The analysis finds that: (1) geographical factors affect mergers and acquisitions in services and manufacturing similarly but cultural factors affect mergers and acquisitions in services more than in manufacturing. (2) Controlling for these bilateral factors, restrictive investment policies reduce the probability of merger and acquisition inflows but this negative effect is mitigated in countries with relatively large shares of manufacturing and (to a lesser extent) services in gross domestic product. The same results hold for the number of merger and acquisition deals received. These findings suggest that the impact of policy is state-dependent and related to the composition of gross domestic product in the target economy.

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