ESSAYS ON THE EFFECT OF CROSS BORDER MERGERS & ACQUISITIONS

Abstract

The flow of inward Foreign Direct Investments (FDI) to Italy has increased dramatically starting from the 1990’s and the same evidence has been found for other European countries. Foreign market entry mode is considered important from both an economic and a policy perspective: it is always more frequently asked in the policy debate whether authorities should block or encourage foreign takeovers and what type of strategy to access the market should be encouraged. In this paper, I will focus on cross border M&A, given their increasing role as source of FDI inflows and the scarcer empirical evidence compared to their counterpart - greenfield investments. In particular, by using Italian firm-level data, this paper analyzes the impact of cross border M&A on two key measures of firms’ performance – namely productivity and employment - over the years 2010-2013. I chose to disentangle between short- and long-term effects of cross boarder M&A on firms’ performance since, according to theory, they could be different. In addition, I will try to understand which of the factors that affect cross border M&A may be relevant drivers of the productivity change in Italian acquired firms. In A combination of the difference-in-difference estimator and the matching estimator is used to consider the selection problem that acquired firms would perform better irrespective of ownership.