Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94752
Authors: 
Norbäck, Pehr-Johan
Persson, Lars
Year of Publication: 
2001
Series/Report no.: 
IUI Working Paper 569
Abstract: 
Investment liberalizing countries are often concerned that cross-border mergers & acquisitions might have an adverse effect on domestic firms and benefit multinational enterprises (MNEs). 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 reservation price. The preemption effect also implies that the seller might capture some of the MNEs' initial rents. Moreover, other policies used in times of investment liberalization, such as restructuring, are explained through their effect on the value of the domestic assets.
Subjects: 
Investment Liberalization
FDI
Mergers & Acquisitions
Restructuring
JEL: 
F02
F23
K21
L13
L33
O12
Document Type: 
Working Paper

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