2006–2010

Globalization and Profitability of Cross-border Mergers & Acquisitions

Reprint No. 2008:10

Author(s): Pehr-Johan Norbäck and Lars PerssonYear: 2008 Title: Economic Theory Volume (No.): 35 (2) Pages: 241–266


This paper studies how the surplus generated by the globalization process is divided between MNEs and owners of domestic assets.We construct an oligopoly model where the equilibrium acquisition pattern, the acquisition price and firms’ greenfield investments are endogenously determined. Acquisition entry is shown to bemore likelywhen the complementarity between domestic and foreign assets is high. However, we show that such acquisitions might have a low profitability, since the bidding competition over the domestic assets is then so fierce that the firms involved would be better off not starting a bidding war. Risks associated with different entry modes are also examined.


Reference:
Norbäck, Pehr-Johan and Lars Persson (2008), "Globalization and Profitability of Cross-border Mergers & Acquisitions". Economic Theory 35(2), 241–266.

Pehr-Johan Norbäck

Contact

Ph: +46 8 665 4522
Mob: +46 73 547 3379
pehr-johan.norback@if...

Lars Persson

Contact

Ph: +46 8 665 4504
lars.persson@ifn.se

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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