首页﹀
Bilateral Investment Treaties and Cross-Border M&As: Understanding through Legal Origins
2025-06-06
Time: 10:00 am - 11:30 am, June 6th, 2025
Speaker: Jaerim Choi (Yonsei University)
Venue: 1F, Wanzhong Building, Langrun Garden, Peking University
Abstract:
Do bilateral investment treaties (BITs) play a role as intended in providing a secure environment for foreign investors and thereby promoting cross-border mergers and acquisitions (M&As)? To answer this question we develop a two-country model with heterogeneous firms, incomplete contracts, and a court system. The model predicts that BIT fosters cross-border M&As by resolving contractual problems inherent in investment across borders. Such effects are most pronounced when a target firm belongs to a civil law system, where property rights are less secure and contracts are weakly enforced. By leveraging comprehensive M&A transaction deals between 1990 and 2019, combined with a generalized difference-in-difference strategy, we find supporting evidence of the model predictions. The results are robust to difference-in-differences estimators with multiple time periods and an instrumental variable strategy.
Speaker:
Jaerim Choi is an Assistant Professor at the School of Economics, Yonsei University. His research interests span international economics and applied microeconomics, with a particular focus on global value chains, trade shocks and labor markets. His recent work examines topics such as pollution offshoring, immigration and credit frictions in supply chain formation. His research has been published in leading international journals, including the Journal of Development Economics, Journal of International Economics, International Economic Review, American Journal of Agricultural Economics, and Journal of Mathematical Economics.