“Good M&As” Tend to Involve Foreign Companies, While Domestic Mergers Produce Few Productivity Gains

M&As (mergers and acquisitions of companies) are motivated by and often result in gains for the acquirer. However, it remains uncertain whether the economy overall benefits from them. For example, if a combined entity gains a stronger hold in the market and raises selling prices, customers will lose out. If restructuring efforts lead to wage cuts, it will be employees that bear the burden. “Good M&As” are cases in which the tie-up generates synergy effects and increases productive efficiency. This paper examines the effectiveness of M&As in improving productivity, distinguishing between whether the buyers are foreign or domestic companies.