2006–2010

Globalization and Profitability of Cross-border Mergers & Acquisitions

Särtryck nr 2008:10

Författare: Pehr-Johan Norbäck och Lars PerssonÅr: 2008 Publikation: Economic Theory Årgång (nr): 35 (2) Sidor: 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.


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

Pehr-Johan Norbäck

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Lars Persson

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