Cross-Border M&A and Institutional Arbitrage : The Trade-off Between Transaction Costs and Strategic Opportunities = 국경 간 인수합병과 제도적 차익거래: 거래비용과 전략적 기회의 상충 관계

국문 초록 (Abstract)

본 논문은 국가 간 제도적 차이가 국경 간 인수합병(M&A) 의사결정에 미치는 영향을 국제경영 연구의 기존 관점에서 재검토한다. 기존 연구는 제도적 거리를 주로 거래비용과 불확실성을 증가시키는 장애 요인으로 인식해 왔으나, 이러한 설명만으로는 다국적기업이 제도적으로 이질적인 국가에 지속적으로 투자하는 현상을 충분히 설명하기 어렵다. 이에 본 연구는 제도적 격차가 단순한 비용 요인이 아니라, 거래비용의 증가와 제도적 차익거래 기회가 동시에 작동하는 구조를 형성한다고 주장한다.
이를 검증하기 위해 본 연구는 SDC Platinum과 세계은행의 세계거버넌스지표(WGI)를 활용하여 국가 쌍 수준의 반사실적 선택집합을 구축하고, 실제 인수합병 거래와 실현되지 않은 대안을 비교 분석하였다. 분석 결과, 제도적 격차와 국경 간 M&A 발생 확률 간에는 U자형 관계가 존재함을 확인하였다. 제도적 차이가 확대될수록 거래 및 조정 비용은 지속적으로 증가하지만, 일정 수준 이후에는 그 억제적 한계효과가 약화되는 반면, 규제 회피나 조세 최적화와 같은 제도적 차익거래의 전략적 이익은 더욱 두드러진다. 이로 인해 기업은 제도적 차이가 매우 작거나, 충분히 큰 환경에서 국경 간 인수합병을 선택할 가능성이 높아진다.

다국어 초록 (Multilingual Abstract)

Traditional research in International Business (IB) has long viewed institutional distance as a hurdle that raises costs and discourages cross-border investment. Yet this perspective leaves an unresolved puzzle: why do multinational enterprises continue to engage in M&A in institutionally distant countries despite the substantial risks involved? This paper addresses this question by arguing that institutional gaps are not merely sources of cost, but reflect a fundamental tension between rising transaction costs and the potential gains from institutional arbitrage.
To examine this mechanism, this study constructs a global dyad-level counterfactual choice set using data from SDC Platinum and the World Bank’s Worldwide Governance Indicators (WGI). By comparing realized M&A deals with feasible but unrealized alternatives, this approach mitigates selection bias and allows for a direct assessment of how firms evaluate institutional differences when making cross-border investment decisions.
The empirical analysis reveals a clear U-shaped relationship between institutional distance and the likelihood of cross-border M&A. While transaction and coordination costs increase with institutional distance, their marginal deterrent effect weakens beyond a certain point. At the same time, the benefits of institutional arbitrage, such as regulatory relief or tax advantages, become increasingly salient in highly heterogeneous environments. As a result, firms are most likely to invest either when institutional differences are small or when they are sufficiently large for arbitrage opportunities to outweigh the costs.

목차 (Table of Contents)

• TABLE OF CONTENTS
• I. INTRODUCTION 1
• II. THEORY AND HYPOTHESES 4
• 2.1 Institutional Distance and Transaction Costs: The Liability of Foreignness 4
• 2.2 Institutional Voids and Strategic Arbitrage: Heterogeneity as an Opportunity 5
• 2.3 Haans et al.(2016)’s “Thinking about U”: Mechanisms of Non-linear Trade-offs6
• 2.4 Hypothesis Development8
• III. RESEARCH METHODOLOGY9
• 3.1 Data Sources and Sample Construction 9
• 3.2 Counterfactual Choice Set Approach to Mitigate Selection Bias9
• 3.3 Variable Measurement: Institutional Gap and Controls 10
• 3.4 Estimation Strategy12
• IV. EMPIRICAL RESULTS 14
• 4.1 Descriptive Statistics and Theoretical Interpretation of Controls14
• 4.2 Hypothesis Testing: The Dual Dynamics of Costs and Opportunities15
• 4.3 Marginal Effects Analysis and Visual Verification16
• V. DISCUSSION AND CONCLUSION19
• REFERENCES 22
• 국문초록24
• LIST OF TABLES
• TABLE 1 Theoretical Comparison of Perspectives on Institutional Differences 6
• TABLE 2 Descriptive Statistics12
• TABLE 3 Pairwise correlations12
• TABLE 4 Probit Regression Results on Cross-border M&A Occurrence 16
• LIST OF FIGURES
• FIGURE 1 Global Trends in Cross-Border M&A from BCG report 2024 2
• FIGURE 2 Conceptual Framework 7
• FIGURE 3 The 6 Dimensions of the Worldwide Governance Indicators (WGI) 11
• FIGURE 4 The U-shaped Relationship 18