Industry Linkages, Uncertainty, and Cross-border Mergers

January 2, 2026, Paper: "Multinational firms are strategically changing their organizations in response to escalating geopolitical risks. This paper investigates the role of mergers and acquisitions (M&A) in restructuring firm organizations in a time of uncertainty. Our initial step quantifies the relative distance between acquiring and target firms within a production value chain. Regression analysis shows that heightened economic policy uncertainty correlates with a greater likelihood of cross-border acquisitions occurring at more distant production stages. We present a conceptual model grounded in the hypothesis that firms integrate farther along global value chains during times of uncertainty. The implications of our model align consistently with the empirical findings, highlighting the trade-off between synergies and exposure to unexpected shocks in vertical integration decisions along the global production network."