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- Title
International Trade and the Propagation of Merger Waves.
- Authors
Ahmad, Muhammad Farooq; Bodt, Eric de; Harford, Jarrad
- Abstract
Cross-border merger activity is growing in importance. We map the global trade network each year from 1989 to 2016 and compare it to cross-border and domestic merger activity. Trade-weighted merger activity in trading partner countries has statistically and economically significant explanatory power for the likelihood that a given country will be in a merger wave state, at both the cross-border and domestic levels, even controlling for its own lagged merger activity. The role of trade as a channel for transmitting merger waves is confirmed using import tariff cuts and trade sanctions as instruments to mitigate endogeneity. Overall, the full trade network helps our understanding of merger waves and how merger activity propagate across borders.
- Subjects
INTERNATIONAL trade; MERGERS &; acquisitions; DOMESTIC markets; TARIFF; ENDOGENEITY (Econometrics)
- Publication
Review of Financial Studies, 2021, Vol 34, Issue 10, p4876
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhaa104