Cross-border mergers and acquisitions (M&As) have been increasing rapidly both in Japan and worldwide since the latter half of the 1990s. A significant part of recent foreign direct investment (FDI) inflows to Japan takes the form of M&As. I have been working on several research projects on inward FDI in Japan and impacts of out-in M&As on firm-level business performance such as productivity or profitability. Although we found that cross-border M&As had a positive impact on the productivity growth of acquired firms in the case of manufacturing, such studies are very limited for services industries due to data constraints. In recent years, there have been a significant number of cross-border M&As in services industries such as wholesale and retail trade, finance, insurance, computer programming and information services, telecommunications, etc. Moreover, financial and operating data on service sector firms are now becoming increasingly available. The impact of cross-border M&As in the service sector thus is a topic of considerable importance for the Japanese economy that has received little research attention to date, but on which, thanks to the growing availability of data, it is now possible to conduct meaningful empirical research. The aims of the project are: (1) to understand the size and characteristics of cross-border M&As in the Japanese service sector and compare them with M&As in the United States; (2) to analyze the impact of cross-border M&As on the productivity or business performance of firms in the service sector; and (3) to consider the policy implications of the findings. It has been argued anecdotally that the productivity of Japanese service sector firms is relatively low compared with firms in other developed countries. At the same time, being acquired by a foreign firm may help to boost the performance of target firms in the service sector through the transfer of advanced technology or managerial know-how. If this is the case, then the promotion of inward foreign direct investment and inward cross-border M&As in Japan's service sector should be high on the government' s policy agenda. In order to make meaningful policy proposals, I conduct a comparative study of M&As in the United States and Japan, which will help to highlight commonalities and/or specific characteristics of M&As in Japan. To this end, I am going to compile statistics on cross-border M&As in Japan using both industry-level and firm-level data. In addition, I am going to compile several other supplementary sets of statistics related to cross-border M&As and overseas activities by major multinational enterprises. Using these statistics, I am then planning to conduct a statistical analysis to examine the determinants and effects of cross-border M&As both at the industry-level and at the firm-level. Specifically, I want to analyze whether acquired firms experience an improvement in productivity and whether industries with more cross- border M&As show higher productivity growth. Based on the results, I will examine whether Japan should promote inward cross-border M&As and what should be done to boost productivity in the Japanese service sector.