Abstract
Research of Comparative Advantages in the Context of Determinants of Cross-Border Mergers and Acquisitions in the European Area
Highlights
Companies in the current global economic environment with a strategy of merging with their competitors in the form of mergers or acquisitions restrict competition in order to subsequently increase their profit margin (Erel et al, 2012).Neary's theoretical model (2007) predicts that international differences in technology create incentives for bilateral mergers in which low-cost companies absorb foreign high-cost companies
The main goal of the paper is based on quantile regression analysis to identify the link between the number and volume of cross-border mergers and acquisitions in the European period 1998-2015 in the manufacturing and services sectors with revealed comparative advantage and the degree of specialization calculated by the revealed comparative advantages (RCA) 1 index, the Balassa index RCA 2 and the Michael index
We discuss about the relative comparative advantage, Balassa index and Michaely index affecting the increase in the average volume of mergers and acquisitions going from the source economy to the target country over the period 1998-2015 in EU countries
Summary
Neary's theoretical model (2007) predicts that international differences in technology create incentives for bilateral mergers in which low-cost companies absorb foreign high-cost companies. Cross-border mergers and acquisitions create more specialization in terms of comparative advantage, i. They shift production and business models close to what would prevail in the competitive Ricardian world (based on technological differences between countries). The empirical literature is based on the revealed comparative advantages (RCA) for the assessment of specialized country models. The Revealed Comparative Advantage Index (RCA) is used to identify the most important goals of companies and to determine the target group of products for the country's exports. It is used to calculate the relative advantages or relative disadvantages of a particular country in a particular class of goods and services (Suwannarat, 2017; French, 2017)
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