Research of comparative advantages in the context of determinants of cross-border mergers and acquisitions in the european area

Abstract

Cross-border mergers and acquisitions are considered to be a major global phenomenon that enables companies to create synergies for business, acquire assets, generate tax savings, gain access to new technologies, diversify business activities, increase the company's competitiveness and market value. 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 manu-facturing and services sectors with revealed comparative advantage (or comparative disadvantage) and the degree of specialization calculated by the RCA 1 index, the Balassa index RCA 2 and the Michael index. In this paper, 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. The effects of independent variables (RCA 1, RCA 2 and MI) in source and target countries in the observed period 1998-2015 on the dependent variable (volume of realized cross-border mergers and acquisitions) were monitored in quartiles. We divided the volume of realized cross-border mergers and acquisitions into four equal groups, each of which represents a quarter of the data sample. Based on the results of the quantum regression, we found that the growing revealed comparative advantage and degree of specialization had a positive effect on the volume of cross-border mergers and acquisitions in the manufactur-ing and services sectors.