Ruhr Economic Papers

Ruhr Economic Papers #159

The Effects of Cross-border M&As on the Acquirers' Domestic Performance - Firm-level Evidence

by Joel Stiebale and Michaela Trax

RWI, University of Duisburg-Essen and RGS Econ, 01/2010, 37 S./p., 8 Euro, ISBN 978-3-86788-178-4

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Abstract

This paper provides empirical evidence on the effects of cross-border M&As on investing firms' domestic performance in the U.K. and France. We build a new firm-level dataset that combines a global M&A database with balance sheet data for the years 2000-2007. Combining matching techniques with a difference-in-differences estimator, we find that cross-border deals boost on average domestic employment, sales, and investment, and they are not accompanied by a downsizing of the domestic labor force in neither of both countries. Further, acquisitions in knowledge-intensive industries lead to improvements in domestic productivity. Our results display some heterogeneity across industries and types of acquisitions, suggesting a connection between the motives for international acquisitions and their resulting effects.

JEL-Classification: F23, G34, L23, D24

Keywords: Multinational firms; cross-border M&A; productivity; employment growth; investment

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