Working Paper Series
International Mergers with Financially Constrained Owners
(), Pehr-Johan Norbäck
() and Lars Persson
Abstract: This paper proposes a cross-border M&A model with
financially constrained owners in which the identity of the buyer and
seller can be determined. We show that policies blocking foreign
acquisitions to protect the domestic industry can be counterproductive.
Foreign acquisition can increase the domestic owner’s investment in growth
industries by reducing their financial restrictions. This calls for a
”financial” efficiency defense in the merger law. We also show that
cross-border M&As are not only driven by effects on the merged entity, but
also driven by the seller’s alternative investment opportunities.
Keywords: Investment Liberalization; Mergers & Acquisitions; Corporate Governance; Ownership; (follow links to similar papers)
JEL-Codes: F23; K21; L13; O12; (follow links to similar papers)
32 pages, September 24, 2012
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