Cherries for sale: The incidence and timing of cross-border M&A

Journal article: This paper develops a model of cross-border M&A activity that features firm-level productivity shocks and endogenous export activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels that induced them to invest in large export networks several years prior to acquisition, but subsequently experienced a negative productivity shock (i.e., cherries for sale). From the theory we derive a dynamic panel binary choice empirical model to predict cross-border M&A activity, and find strong evidence for our hypotheses connecting the evolution of firm-level productivity to the ultimate targets of cross-border acquisitions using French firm-level data.

Author(s)

Bruce A. Blonigen, Lionel Fontagné, Nicholas Sly, Farid Toubal

Journal
  • Journal of International Economics
Date of publication
  • 2014
Keywords JEL
F2 L1
Keywords
  • Foreign Direct Investment
  • Productivity
  • Export Networks
Pages
  • 341-357
Version
  • 1
Volume
  • 94