Cross-Border Mergers and Acquisitions in Services : The Role of Policy and Industrial Structure

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.

Bibliographic Details

Main Authors:	Barattieri, Alessandro, Borchert, Ingo, Mattoo, Aaditya
Language:	English en_US
Published:	World Bank, Washington, DC 2014-06
Subjects:	ACCOUNTABILITY, ACCOUNTING, AGRICULTURE, AMOUNT OF CAPITAL, BANK DEPOSITS, BANK POLICY, BARRIER, BARRIERS TO INVESTMENT, BILATERAL TRANSACTIONS, BUSINESS SERVICES, CAPITAL FLOWS, COMMON LEGAL ORIGIN, COUNTRY FIXED EFFECTS, DATABASE INFORMATION, DEREGULATION, DERIVATIVE, DERIVATIVES, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT POLICY, DUMMY VARIABLES, DYNAMIC ECONOMIES, E-MAIL, ELASTICITY, ELASTICITY OF SUBSTITUTION, ELECTRICITY, ESP, FINANCIAL DEVELOPMENT, FINANCIAL SERVICES, FISCAL POLICY, FIXED COST, FIXED COSTS, FOREIGN COMPANY, FOREIGN DIRECT INVESTMENT, FOREIGN EQUITY, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTOR, FOREIGN MARKET, FOREIGN MARKETS, FUTURE RESEARCH, GDP, GDP PER CAPITA, GOVERNMENT OFFICIALS, GROSS DOMESTIC PRODUCT, HOME COUNTRY, HOST COUNTRIES, HOST COUNTRY, HOST ECONOMY, INBOUND INVESTMENT, INCOME GROUPS, INDUSTRIAL COUNTRIES, INDUSTRIAL STRUCTURE, INDUSTRIAL STRUCTURES, INNOVATION, INSTITUTIONAL FRAMEWORK, INSTRUMENT, INSURANCE, INTANGIBLE, INTELLECTUAL PROPERTY RIGHTS, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INTERNATIONAL ECONOMICS, INTERNATIONAL ECONOMIES, INTERNATIONAL TRADE, INVESTING, INVESTMENT FLOWS, INVESTMENT POLICIES, INVESTMENT PROJECTS, INVESTMENT RESTRICTIONS, KNOWLEDGE ECONOMY, LABOR MARKET, LACK OF TRANSPARENCY, LEGAL PROVISIONS, LEGAL SYSTEM, LICENSE, LICENSES, M3, MANUFACTURING, MARGINAL COSTS, MARKET ACCESS, MARKET ENTRY, MARKET REFORM, MARKET REFORMS, MARKET SIZE, MERGERS, MONOPOLISTIC COMPETITION, MULTINATIONAL, MULTINATIONALS, NETWORKS, NPL, OPEN ACCESS, OPEN COUNTRIES, OUTPUT, PARTICULAR COUNTRIES, PARTICULAR COUNTRY, PC, PER CAPITA INCOME, PHYSICAL DISTANCE, POLITICAL ECONOMY, POLITICAL STABILITY, PRICE INDEXES, PRIVATE SECTOR, PRODUCT DIFFERENTIATION, PRODUCTION FUNCTION, PRODUCTION FUNCTIONS, PRODUCTIVITY, PROFIT MAXIMIZATION, PROTECTION OF INTELLECTUAL PROPERTY, PROTECTIONISM, REGIONAL INTEGRATION, REGIONAL TRADE, REGULATORS, REGULATORY ENVIRONMENT, RESTRICTIVE INVESTMENT POLICIES, RESULT, RESULTS, RETAIL SERVICES, RETURN, ROLE OF INSTITUTIONS, TELECOM, TELECOMMUNICATION, TELECOMMUNICATIONS, TRADE BARRIERS, TRADE LIBERALIZATION, TRADE POLICIES, TRADE POLICY, TRADE PROTECTION, TRADING, TRADING VOLUMES, TRANSACTION, TRANSACTIONS COSTS, TRANSLATION, TRANSPARENCY, TREATY, TRUST FUND, UTILITY FUNCTION, UTILITY MAXIMIZATION, VALUE ADDED, VOICE-OVER-IP, WEB, WORLD ECONOMY, WORLD INVESTMENT REPORT, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19616028/cross-border-mergers-acquisitions-services-role-policy-industrial-structure http://hdl.handle.net/10986/18773
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