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

Bruce A. Blonigen (1) , Lionel Fontagné (2, 3, 4) , Nicholas Sly (1) , Farid Toubal (5)

1 University of Oregon [Eugene]
2 PSE - Paris School of Economics
3 CES - Centre d'économie de la Sorbonne
4 CEPII - Centre d'Etudes Prospectives et d'Informations Internationales
5 ENS Cachan - École normale supérieure - Cachan

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.

Mots clés: Foreign Direct Investment; Productivity; Export Networks

Domaines: Economies et finances

Bruce A. Blonigen, Lionel Fontagné, Nicholas Sly, Farid Toubal. Cherries for sale: The incidence and timing of cross-border M&A. Journal of International Economics, 2014, 94 (2), pp.341-357. ⟨10.1016/j.jinteco.2014.08.005⟩. ⟨hal-01299761⟩