Same as it ever was? Europe's national borders and the market for corporate control |
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Institution: | 1. Frankfurt School of Finance & Management, Sonnemannstraße 9-11, 60314 Frankfurt am Main, Germany;2. Deutsche Bundesbank, Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany;1. School of Economics and Management, Wuyi University, Jiangmen, Guangdong 529020, China;2. Jiangmen Economic Research Center, Jiangmen, Guangdong 529020, China;3. School of Management, Jinan University, Guangzhou, Guangdong 510632, China |
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Abstract: | National borders continue to be strong barriers for mergers and acquisitions in Europe. Using regional data, we construct a gravity model and find that the restraining impact of national borders decreased by more than 17 percent between 1991 and 2007. However, no significant change has occurred since the mid-1990s (i.e., four years before the introduction of the euro). In comparison, we run a corresponding analysis in the United States using the 10 federal regions as country equivalents. The resulting ‘quasi-border’ effect in the United States is weaker than that in the European Union. Yet its decline by 43 percent is much stronger in the same period. We conclude that European integration policy has had little effect on fostering M&A cross-border transactions. |
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Keywords: | European integration Corporate control Border effects F21 G34 |
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