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International Trade and the Propagation of Merger Waves

Thursday, May 3, 2018
4:00 PM - 5:00 PM
Location: Baxter B125
Jarrad Harford, Professor of Finance, Chair of the Department of Finance and Business Economics, Paul Pigott-PACCAR Professor in Business Administration, Foster School of Business, University of Washington

Abstract: Cross-border merger activity is growing in importance. We map the global trade network each year from 1989 to 2016 and compare it to cross-border and domestic merger activity.  Trade-weighted merger activity in trading partner countries has statistically and economically significant explanatory power for the likelihood a given country will be in a merger wave state, both at the cross-border and the domestic levels, even controlling for its own lagged merger activity.  The strength of trade as a channel for transmitting merger waves varies over time and is affected by import tariffs cuts, Euro, EU, EEA, and WTO entry. Overall, the full trade network helps our understanding of merger waves and how merger waves propagate across borders.

Finance Seminars at Caltech are funded through the generous support of The Ronald and Maxine Linde Institute of Economic and Management Sciences (lindeinstitute.caltech.edu) and Stephen A. Ross.

Series: Finance Seminar Series
For more information, please phone 626-395-4228 or email sabrina@hss.caltech.edu or visit https://bit.ly/2JfnRHX

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