Essays on Cross-Border Mergers and Acquisitions, Technology, and Frictional Costs
Loading...
Date
2012
Authors
Lee, Donghyun
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon
Abstract
Foreign direct investment (FDI) has played a major role in the increasing economic globalization of the past couple decades. Cross-border mergers and acquisitions (M & A) is the major source of FDI, particularly for developed countries accounting for as much as two-thirds of FDI. Yet, studies on such cross-border M & A activities are scant in the literature.
This dissertation aims at explaining the relationship between cross-border M & A, technology, and frictional costs using both theoretical and empirical analyses. In chapter II, I conduct empirical analysis to determine the relationship between exchange rates and acquisition FDI. I find that depreciation of the host country's currency leads to an increase in acquisition FDI into high-R & D sectors for U.S. inbound acquisition FDI from multiple country sources, but not for inbound acquisition FDI for other various developed countries. In chapter III, I develop an equilibrium model of cross-border M & A and show that the model predicts that firms from a larger country are more likely to acquire in a smaller country when M & A activity is driven by a technology-seeking motive, but the opposite is true when it is driven by a market-seeking motive. I also find empirical evidence that cross-border M & A activity exhibits behavior consistent with this prediction. In chapter IV, I empirically examine the relevance of heterogeneous sector-specific frictional costs using detailed data on worldwide M & A activity. Results show that cultural distance, tradeability, and regulation play an important role in determining heterogeneous frictional costs across different sectors.
This dissertation includes unpublished co-authored material.