Trade liberalization and industrial restructuring through mergers and acquisitions

This paper analyzes mergers and acquisitions (M&As) as a channel of industrial restructuring after trade liberalization. Using the Canada–United States Free Trade Agreement (CUSFTA) of 1989 as a source of exogenous variation in trade barriers, I show that trade liberalization increased domestic Canadian M&A activity (Canadian firms buying other Canadian firms) by over 70%. There is no robust link between tariff reductions and either domestic U.S. or cross-border M&As. I also provide evidence that domestic M&As transferred resources from less to more productive firms and that the magnitude of the overall transfer was quantitatively important.     

Antecedents of growth through mergers and acquisitions: Empirical results from Belgium

This paper empirically investigates the antecedents of growth through mergers and acquisitions (M&As) in a typical continental European country, Belgium. The article reports on a study using data on 484 private and listed bidders engaging in 990 M&As during 1997-2007, and matches this sample with companies that did not pursue any external growth. By analyzing firm characteristics, industry, and aggregate financial market variables, the study can also discern the motives that are important in the decision to acquire. The results show that neither the firm's cash position nor its cash-generating abilities influence its choice to grow externally. Yet, intangible assets affect the M&A decision positively, whereas ownership concentration and bank loans have a negative effect. In industries where incumbents are operating at a lower scale and in more highly concentrated industries, the odds of firms participating in M&As are larger. Industry deregulation, industry growth, and financial market conditions have no influence. These findings are largely comparable across listed and private firms. Yet, the data do reveal that the operating scale of industry incumbents and industry concentration matter only in horizontal and domestic takeover decisions.     

Trade liberalization through asset markets

Political-economy expositions of trade policy have traditionally described asset or factor ownership as not subject to change. Asset markets, however, allow individuals to change the composition of income sources. We consider an economy with stochastic productivity to show how the equilibrium composition of asset portfolios influences individual attitudes toward free trade. The model links financial market completeness and trade liberalization in the second half of the 20th century and provides a contributing answer to why governments in poorer countries without well-developed financial markets have failed to liberalize trade.     

Trade preferences and political equilibrium associated with trade liberalization

This paper, motivated by the so-called North–South problem in trade, analyzes ex ante trade preferences and the source of potential political conflicts regarding trade liberalization. Developing a dynamic extension of the traditional Heckscher–Ohlin model with imperfect labor mobility and tracking overall dynamic paths from the autarky to free-trade steady states, we demonstrate that in the presence of inter-sectoral migration barrier, bilateral free-trade agreements can be welcomed (opposed) by the majority of workers in a capital-abundant (labor-abundant) country, which is inconsistent with the welfare prediction by Stolper and Samuelson. This paper also proposes a numerical algorithm to solve for the entire transition path of the model under rational expectation. Our simulation experiments further reveal that preannounced and delayed implementation can facilitate a bilateral free-trade agreement by partially neutralizing short-run transitional gains and losses so as to persuade the losers to support the reform without affecting the beneficiaries’ trade preferences.     

Trade liberalization and adjustment in Argentina

This paper looks at trade liberalization attempts in Argentina since 1970, with particular attention to the 1991?–?98 period, estimates the size of the adjustments required by the changes in the trade regimes, and looks at the degree of adjustment attained as manifested by the real effective exchange rate.     

The role of information technology systems in the performance of mergers and acquisitions

Mergers and acquisitions (M&As) are an important tool for improving a firm's competitive positioning and performance. Despite M&As’ promise, however, they often fail to meet performance goals. Challenges often arise when managers try to integrate two companies’ information technology (IT) systems, and the difficulties encountered often create both short- and long-term performance problems for companies. To help address these challenges, we highlight important issues that managers involved in M&As must consider. We also present some best practices that managers should follow to improve the odds of successful IT integration.     

The impact of mergers and acquisitions on brand equity: A structural analysis

An overlooked strategic benefit of mergers and acquisitions (M&As) is their impact on brand equity. M&As may affect consumer brand preferences, which in turn will affect a firm’s profit. We develop a structural model with a difference-in-differences specification to measure how M&As affect a firm’s profit through three mechanisms: brand equity, cost synergies, and product portfolios. We analyze Lenovo’s acquisition of IBM’s PC division in China’s PC market and find that the increase in brand equity contributed the most to increasing Lenovo’s profit, followed by cost synergies. To explore the generalizability of our modeling approach, we apply it to Geely’s acquisition of Volvo and also find that the gains in brand equity contributed the most to Geely’s profit increase.     

Investment liberalization — Why a restrictive cross-border merger policy can be counterproductive

Investment liberalizing countries are often concerned that cross-border mergers and acquisitions, in contrast to greenfield investments, might have an adverse effect on domestic firms and consumers. However, given that domestic assets are sufficiently scarce, we identify a preemption effect and an asset complementarity effect, which imply that the acquisition price is substantially higher than the domestic seller's profits. Moreover, we show that for the acquisition to take place, the MNE must be sufficiently efficient when using the domestic assets, otherwise rivals will expand their business, thereby making the acquisition unprofitable. Consequently, restricting cross-border M&As may also hurt consumers.     

Trade liberalization and intersectoral labor movements

This paper examines the impact of trade liberalization episodes on movements of labor across sectors. The aim is to assess empirically whether increased trade openness leads to increased structural change and, if so, to what extent. Results for a set of 25 liberalization episodes suggest weakly negative effects of liberalization on the extent of intersectoral labor shifts at the economy-wide 1-digit level of disaggregation. We do uncover increased sectoral change after liberalization at the 3-digit level within manufacturing, although the estimated effects are statistically weak and small in magnitude. The effects of liberalization on labor shifts differ across individual countries, in a way related to the scope and depth of reforms.     

中国企业参与国际并购活动深度变革的思考

国际并购是近年来中国企业较为热衷于探索的一种国际化经营方式,不但可以实现企业资源优化配置,更有利于提升企业核心竞争力.本文就对中国企业参与国际并购活动进行了思考,同时提出了具体的深度发展思路,以此提高中国企业参与跨国资本并购活动水平.     

Building a global corporate social responsibility program via mergers and acquisitions: A managerial framework

While previous studies and management conventions often adopted a finance-centric view of cross-border mergers and acquisitions (CBM&A or CBA), we demonstrate that CBA can be an effective platform upon which to build a global corporate social responsibility (CSR) program and that CSR initiatives can be customized for different locales. These CSR-CBA interconnections and customizations respond to a range of stakeholder interests associated with both national and societal institutional factors. We develop a managerial framework for the CSR-CBA setting and illustrate the framework with an exemplar of international expansion through acquisitions combined with the international development and implementation of CSR.     

Trade liberalization and informality nexus: Evidence from Pakistan

This study investigates the impact of trade openness on informal sector employment during the drastic 1988s trade reforms of Pakistan. It is generally perceived that increased external competition in less developed countries results in as an expansion in informal sector, which has less compliance with labor market regulations. Using micro-level data of Pakistan, we study the adjustments in the employment of informal sector due to trade openness. We find that informality and trade openness are associated. In Pakistan, trade reforms have given rise to employment in the informal sector. Our findings are robust to different trade-related measures. A substantial flexibility in labor market is required to benefit from the gains of liberalization.     

我国跨国公司并购现状分析

近年来,我国在国际市场接连出手,跨国并购多个世界级企业。一方面,增强了我国跨国公司的整体实力,有利于学习外国先进管理经营方法;另一方面,大规模的跨国并购也产生了一系列问题。我们应该认识问题、解决问题,使我国跨国公司更高效的运转,更好地实行走出去战略。     

贸易自由化环境效应的实证研究

贸易与环境的关系问题是当今国际经济学界的一个重要问题。本文对研究贸易自由化所导致的环境后果的主要方面和最新动态进行了综述,在此基础上,参考Dean建立的联立方程,从动态和静态两个方面对贸易和环境的相互作用进行考察,采用34个发展中国家的数据进行实证分析,并提出我国应对贸易与环境问题的几点建议。     

The impact of industry-wide and target market environmental hostility on entrepreneurial leadership in mergers and acquisitions

Based on survey data from 115 acquisitions completed between 2008 and 2011 by European acquirers from German-speaking countries, we find evidence that entrepreneurial leadership is a strong predictor of exploration and a weaker but significant driver of exploitation outcomes following M&A. Industry-wide environmental hostility negatively impacts the influence of entrepreneurial leadership on exploitation. Target market environmental hostility negatively impacts the influence of entrepreneurial leadership on exploration. Thus, while entrepreneurial leadership is a key success factor of M&A performance by increasing both, post-merger exploration and exploitation, acquirers need to take environmental conditions at the industry and market level into account.     

知识产权保护与自由贸易的冲突与协调

知识产权保护与自由贸易的冲突由来已久,TRIPS协议实施后,更引发了国家之间尤其是发达国家和发展中国家之间在贸易及其他利益方面的多种冲突,因此发达国家和发展中国家应加强在知识产权保护方面的协调,我国也应采取相应对策以减少知识产权冲突,充分发挥知识产权保护机制的积极作用。     

Trade liberalization, wage inequality, and endogenously determined nontraded goods

We examine the boundary between traded and nontraded goods as a channel for trade to impact factor prices. In a two-country, two-factor, continuum-good model, tariffs generate a range of nontraded goods. A tariff reduction has a direct effect to expand a country’s import set and an indirect effect through terms of trade to expand its export set. We show that the export expansion can dominate the import expansion, raising the relative demand for the factor intensively used in production. The result is useful in explaining observed rising wage inequality in developing countries following trade liberalization.     

Investment liberalization and international trade

This paper estimates the cross-price elasticity of exports with respect to investment costs for bilateral relations between 36 countries. We show that the effect of reducing foreign direct investment costs on exports depends on country characteristics and trade costs as predicted by the [Markusen, 1997] and [Markusen, 2002] model. When countries differ in relative factor endowments and trade costs are low, investment liberalization stimulates exports, whereas when countries are similar in terms of relative factor endowments and size, and trade costs are moderate to high, investment liberalization reduces exports.     

Trade liberalization and the environment: The case of intra-industry trade

Abstract

While a large body of literature examines the environmental impact of trade on the environment, this discussion focuses largely on the context of inter-industry trade. Empirical evidence has long suggested that an increasing share of international trade takes the form of intra- rather than inter-industry trade. In an attempt to fill this gap, the present paper uses a price-setting duopoly model of intra-industry trade to highlight the environmental consequences of trade liberalization when oligopolistic rivalry rather than comparative advantage drives international trade. We find that the environmental impact of trade liberalization depends mostly on two factors, namely, on the nature of pollution (i.e. whether it is local, transboundary or global) and on which country liberalizes trade (i.e. whether it is the ‘clean’ country or the ‘dirty’ country).