The discontinuous integration of Western Europe's heterogeneous market for corporate control from 1995 to 2007

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In Europe, numerous institutional reforms aimed at creating an economic union have led to a decreased relevance of borders over time. This study focuses on the market for corporate control within the EU 15 from 1995 to 2007, using gravity regressions to analyze integration. Findings indicate that borders lost significance from 1995 until the new economy bubble burst, with the transition from the European Economic Community to the EU in 1993 and the euro's introduction likely accelerating this integration. However, after this period, no further progress driven by institutional factors was observed. Geographical distance consistently became less relevant for mergers and acquisitions throughout the entire timeframe. The ongoing lack of full integration is highlighted by the heterogeneity within Europe, evidenced by varying bilateral border effects. Country pairs with liberal capital market perspectives, such as the Netherlands, Germany, and the UK, still face relatively minor barriers. This suggests that the incomplete integration in Europe may not stem from insufficient institutional reforms. Additionally, Poisson estimations reveal that results are stable regardless of observation numbers or the log of aggregated transaction values, although using levels as a dependent variable is deemed inappropriate.