Working Paper Series
Domestic versus Cross-Border Acquisitions: Which Impact on the Target Frims' Performance?
() and Habib Zitouna
Abstract: This paper investigates the effects of horizontal
acquisitions on the performance of target firms in the 1990's. Using French
manufacturing firm-level data, we examine two main indicators of
performance: the profit and the productive efficieny. We distinguish
domestic from cross-in-difference estimation techniques associated to a
matching propensity score procedure. We find that M&A do not increase the
profit of French target firms. These results suggest that firms probably
redistribute efficiency gains at the upstream and/or downstream production
stage. There is no evidence of an increase in market power. In addition,
the consequences of domestic and cross-border M&A significantly differ.
Efficiency gains are stronger for cross-border M&A. This conclusion is
however true only for extra-Europan Union operations. The achievement in
the European economic integrtion certainly explains the absence of
difference between European and domestic acquisitions. Finally, our results
cast some doubt on the frequent discrimination attitude towards foreign
takeovers and the fears of their impact on firms' performance and the hos
Keywords: Multinational Firms; Foreign Direct Investment; Mergers and Acquisitions; Take-Overs; Firms' Performance; (follow links to similar papers)
JEL-Codes: F23; L10; L20; (follow links to similar papers)
42 pages, October 24, 2005
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