|September 2012||Cherries for Sale: Export Networks and the Incidence of Cross-Border M&A|
with Bruce A. Blonigen, Nicholas Sly, Farid Toubal: w18414
This paper develops a dynamic model of cross-border M&A activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels several years prior to acquisition, but then suffered a negative productivity shock (i.e., cherries for sale). With high ex ante productivity levels, target firms are able to invest in large export networks that are valuable to foreign multinationals because of locational differences and trade costs. Subsequently, domestic firms that experience reductions in productivity no longer find their established network as valuable to serve independently, increasing the surplus generated by a foreign acquisition. From the theory we derive a dynamic panel binary choice empirical model that uses predetermine...
Published: Journal of International Economics Volume 94, Issue 2, November 2014, Pages 341–357 Cover image Cherries for sale: The incidence and timing of cross-border M&A ☆ Bruce A. Blonigena, b, , , Lionel Fontagnéc, , Nicholas Slya, d, , Farid Toubale,