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A Note on Cross-Border Mergers and Investment

Author

Listed:
  • Moore, Winston
  • Stephen, Jeremy

Abstract

The theoretical literature suggests that there should be a bi-directional relationship between investment and mergers. This essay uses homogenous and heterogeneous panel Granger causality tests to examine this hypothesis. The paper finds that in high-income countries, cross-border mergers tend to Granger cause investment, while in low- to middle-income countries, investment Granger causes mergers.

Suggested Citation

  • Moore, Winston & Stephen, Jeremy, 2006. "A Note on Cross-Border Mergers and Investment," MPRA Paper 21582, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:21582
    as

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    File URL: https://mpra.ub.uni-muenchen.de/21582/1/MPRA_paper_21582.pdf
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    References listed on IDEAS

    as
    1. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    2. Tobin, James, 1982. "Money and Finance in the Macroeconomic Process," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(2), pages 171-204, May.
    3. Boyan Jovanovic & Peter L. Rousseau, 2002. "The Q-Theory of Mergers," American Economic Review, American Economic Association, vol. 92(2), pages 198-204, May.
    4. George Bittlingmayer, 1996. "Merger and the returns to labour and investment," Applied Economics Letters, Taylor & Francis Journals, vol. 3(3), pages 145-148.
    5. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    6. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    7. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    8. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    9. repec:dau:papers:123456789/6159 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Mergers; Investment; Causality; Panel Data;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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