Resource title

Unlocking the value of cross-border mergers and acquisitions

Resource image

image for OpenScout resource :: Unlocking the value of cross-border mergers and acquisitions

Resource description

Most FDI takes place between the developed countries, which suggests that the market-seeking motive is important for understanding FDI. However, given the stylized fact that trade barriers (e.g. transportation costs and financial barriers) have declined over the past 20 years, models that aim to explain market-seeking FDI tend to predict a decline in FDI. Neary (2008) offers two explanations for this puzzle: (1) the export platform motive (where firms gain access to an integrated market by investing in one of the integrated countries); (2) Neary s (2007) GOLE model, which explains cross-border mergers and acquisitions (this model is of interest since most FDI comes in the form of M&As). By using a gravity framework, where we also deal with the zero gravity problem , we confirm the predictions of the GOLE model.

Resource author

Steven Brakman, Gus Garita, Harry Garretsen, Charles van Marrewijk

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26339

Resource license

Adapt according to the presented license agreement and reference the original author.