The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions

TitleThe Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions
Publication TypeWorking Paper
Year of Publication2013
AuthorsMC. Di Guardo, E. Marrocu, R. Paci
Number2013_08
KeywordsCross-border M&As, cultural and political distances, european neighboring countries, European Union, geographical distance, zero-inflated models
Abstract

The paper explores the concurrent effects of cultural, political, and spatial distances on M&A flows occurring between any two countries belonging to the whole European Union (27 States) or to the European Neighbors group (16 States) over the period 2000-2011 . By employing zero-inflated negative binomial specifications, entailing both a binary and count process, we adequately model the two different mechanisms which may generate zero observations in the cross-border bilateral deals. Zeros may be due to either the lack of any transactions or unsuccessful negotiations. We find robust evidence that the multi-dimensional distance between two countries negatively affects the probability that they will engage in M&A deals, while the recurrence rate of these deals is positively related to population, gross domestic product, and technological capital and negatively related to geographical distance.

Citation Key6356
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