Daniel Gomez Gaviria
Ph.D. Candidate in Business Economics
Research Interests: Empirical International Trade, Industrial Organization and antitrust, Labor and Human Capital
Job Market Paper
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Mergers and Heterogeneous Firms: Trade, asset reallocation and productivity
Abstract: Coming Soon with complete draft |
Work in Progress
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Trade-induced Mergers and Acquisitions: FTAs and asset reallocation through M&As
Abstract: This paper studies the effect of trade liberalization on merger and acquisition (M&A) activity for a sample of 63 free trade agreements (FTAs) involving both developed and developing countries over the past 30 years. I model M&As as following a Poisson distribution where the Poisson arrival rate is parametrized as a function of changes in tariffs, time and industry fixed effects. The exogenous source of variation exploited is the change in tariffs across industries. The evidence in support of a causal link between trade liberalization and the market for corporate control is mixed but certain patterns emerge: smaller and less developed countries signing bilateral agreements see large increases in domestic M&A activity. Larger and more developed countries tend to have larger increases in cross-border mergers. Domestic mergers are a lot more prevalent in this sample than cross-border mergers and M&A activity in the service, financial and retail sectors is particularly strong and increased substantially following FTAs. |
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M&As, trade, asset reallocation and productivity
Abstract: Abstract This paper explores the contributions of the market for corporate control and resulting changes in ownership to increases in productivity following trade liberalization. Using the Colombian unilateral trade liberalization of 1991 as a natural experiment and the cross-sectional variation in tariffs across sectors, I argue that trade induces the more productive firms to expand and the less productive firms to shrink as the value of sector-specific assets increases for the more productive and decreases for the less productive firms. M&As are one way to accomplish this reallocation leading to the observed increase in aggregate productivity. |
Pricing the risk of Default: Are Bonds Enough? (With Boris Nikolov)
Abstract: This paper implements a reduced form credit default swap (CDS) pricing
model. Theoretical prices found are compared with market prices to evaluate
the goodness of fit. Theoretical prices and pricing errors are inspected
by rating classes, sectors of economic activity and currency denomination of
CDS. Pricing errors are analyzed through panel data estimation techniques,
to find determinants of pricing errors. These determinants could be used in
theoretical pricing models as well as by practitioners when evaluating credit
risk. Results suggest that debt market information is not enough for pricing
credit risk and that equity markets have the potential for complementing
credit pricing techniques. |
