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Network Determinants of Cross-Border Merger and Acquisition Decisions
Author:
Tatiana Didiernull

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Sebastian Herradornull

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Magali Pinat
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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 264
Language:
English
Publication Date:
04 Dec 2019
DOI:
https://doi.org/10.5089/9781513512556.001
ISBN:
9781513512556
ISSN:
1018-5941
Pages:
43
Keywords:
WP; primary sector; Cross-Border Merger and Acquisition; Networks; Informational Effect.; trade openness; ERGM estimation methodology; M&A investment; M&A determinant; trade solution; targeted firm; Comparative advantage; Manufacturing; Trade balance; Exports; Civil society; Global
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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.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 264