scholarly journals Malaysian Acquiring Firms' Shareholders' Wealth Effect Following Cross-Border Acquisition

2017 ◽  
Vol 3 (2) ◽  
pp. 147-158
Author(s):  
Md. Mahadi Hasan ◽  
Yusnidah Ibrahim ◽  
Raji Jimoh Olajide ◽  
Mohd Sobri Minai ◽  
Md. Mohan Uddin
Keyword(s):  
Analysis Of Variance ◽  
Euclidean Distance ◽  
Abnormal Returns ◽  
Wealth Effect ◽  
Target Firm ◽  
Distance Method ◽  
Cross Border ◽  
Long Run ◽  
Acquiring Firms ◽  
The Impact

Purpose: The purpose of this study is to investigate long run shareholders' wealth effect (SWE) of Malaysian acquiring firms following cross-border acquisition (CBA). Methodology: Using buy-and-hold abnormal returns (BHAR) measure of SWE and Euclidean distance method for identifying matching firms, the study investigated 176 CBA deals of Malaysian acquiring firms for the years 2004-2015. Both parametric tests (such as conventional t-statistics, skewness adjusted t-statistics, bootstrapping skewness adjusted t-statistics and Multivariate of Analysis of Variance) and non-parametric statistical (such as Wilcoxon-Mann-Whitney test) tools were employed to analyze the data and test the hypotheses regarding the impact of CBA deals on acquiring firms' SWE. Results: The research found that the SWE of acquiring firms is significantly positive in the shorter period while negative or mixed in the longer period. Furthermore, SWE is found to be different across several groups: (i) Shariah-complaint status firms vs. conventional firms (ii) level of control in target firm (such as major vs. minor acquisitions), (iii) Diversifying acquisition (for example, related vs unrelated acquisition). However, SWE does not differ from industry to industry. Implications: This research presents unique empirical evidences related to long run SWE of Malaysian acquiring firms following CBA. The findings imply that CBA is more success in the longer period.

scholarly journals Valuation effects of cultural disparity on cross border mergers: The evidence from India

2019 ◽  
Vol 8 (4) ◽  
pp. 21-40
Author(s):  
Manish Tewari ◽  
Pradip Banerjee ◽  
Soumen De
Keyword(s):  
Cultural Distance ◽  
Abnormal Returns ◽  
Business Group ◽  
Cross Sectional ◽  
Valuation Effects ◽  
Cross Border ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
Acquiring Firms ◽  
Short Run

The object of this study is to explore the effect of cultural distance on both the long run and short run performance of cross border mergers and acquisitions undertaken by Indian acquiring firms. We utilize buy and hold returns (BHAR), cumulative abnormal returns (CAR) and cross-sectional regression analysis in our study. Adopting the traditional Hofstede measure of cultural distance and other pertinent variables, commonly used to measure cultural differences, we document a negative and statistically significant influence of cultural distance on Indian cross-border M&As and corroborate some of other findings reported in prior research. Also, we find that the BHAR is nevertheless higher when the acquisitions are friendly, paid for 100% cash, and the acquiring firm is large, older and belongs to a business group. The inclusion of the variable ‘business group’ along with industry relatedness and acquirer size provides valuable insights into the Indian cross border acquisition landscape, wherein business groups dominate to a great extent.

DO PRE & POST MERGER INTEGRATION MATTERS IN CROSS BORDER MERGER & ACQUISITION (CBM&A)

2020 ◽  
Vol 38 (2) ◽  
Author(s):  
Suman Talreja ◽  
Sajid Hussain Mirani ◽  
Jawaid Ahmed Ahmed Oureshi ◽  
Farhan Ahmed
Keyword(s):  
Abnormal Returns ◽  
The United States ◽  
Market Model ◽  
Event Window ◽  
Cross Border ◽  
Announcement Date ◽  
Acquiring Firms ◽  
Short Run ◽  
The Uk ◽  
The Impact

This study aims to assess the impact of deal size, value and firm-specific factors on the performance of UK acquiring firms from 2006 to 2016 in short-run. The event window methodology was used to analyze short run effects and standard market model was used to calculate abnormal and expected returns. Short event window was made from one day before the announcement of CBM&A to the one day after the announcement date of the event and from five days before the announcement date to the five days after the date of the announcement of the deal and similarly from ten days before the event was announced for ten days after the event was announced (-1, 1), (-5, 5) and (-10, 10) respectively. The study infers that the UK acquirers do not earn statistically significant positive abnormal returns in the short run. The uni variate analysis shows that the short-run performance of UK acquirers is influenced by acquisition strategy, and the payment methods. After the fifth merger wave, international deals in merger and acquisition along with cross border deals started, which created the value for the economy as well. Since 1985, several deals have been done in the United States and the United Kingdom. This research paper is intended to provide empirical evidence on recent data of CBM&A transactions of the UK acquiring firms. The present study is a indispensable for the firms seeking cross border deals and fills the gap in the existing literature.

Acquirer’s corporate reputation in cross-border acquisitions: the moderating effect of country image

2018 ◽  
Vol 27 (7) ◽  
pp. 858-870 ◽  
Author(s):  
Michela Matarazzo ◽  
Giulia Lanzilli ◽  
Riccardo Resciniti
Keyword(s):  
Corporate Reputation ◽  
Country Image ◽  
Target Firm ◽  
Content Type ◽  
Repurchase Intentions ◽  
Cross Border ◽  
Acquiring Firms ◽  
Good Reputation ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate whether, in the context of a cross-border acquisition, the acquirer’s country image (CI) could moderate the relationship between the acquirer’s corporate reputation (CR) and consumers’ repurchase intentions towards the products of the post-acquisition target. Design/methodology/approach The authors examined the roles played by the acquirer’s CR and the acquirer’s CI on consumer behaviour by considering an Italian target firm with a high reputation and comparing four foreign acquiring firms with different combinations of CR (poor/good) and CI (high/low). Findings It was found that both CR and CI have a significant impact on Italian consumers’ intention to repurchase the products of the post-acquisition target. Furthermore, the results show a greater increase in consumers’ repurchase intentions when a good reputation of the acquirer is paired with a high CI for the acquirer, but a high CI cannot compensate for a poor CR. Originality/value The research investigates, in the context of cross-border acquisitions (CBAs), the impact of the acquirer’s CR and the acquirer’s CI on the host country consumers’ repurchase intentions after the CBA, which has not previously been thoroughly examined. It can help managers to understand the conditions under which CBAs will be favourably evaluated.

Best-value supply chains and firms’ competitive performance: empirical studies of their linkage

2015 ◽  
Vol 35 (12) ◽  
pp. 1688-1709 ◽  
Author(s):  
Xun Li ◽  
Qun Wu ◽  
Clyde W. Holsapple
Keyword(s):  
Supply Chains ◽  
Competitive Advantage ◽  
Empirical Studies ◽  
Abnormal Returns ◽  
Competitive Performance ◽  
Content Type ◽  
Long Run ◽  
Best Value ◽  
Multiple Method ◽  
The Impact

Purpose – Best-value supply chains characterized by agility, adaptability, and alignment, have become a crucial strategic means for firms to create and sustain competitive advantage in today’s turbulent environment. The purpose of this paper is to investigate linkage between best-value supply chains and firms’ competitive performance. Design/methodology/approach – In Study 1, survey data from 76 firms is used to test the impact of the three qualities of best-value supply chains on firms’ competitive performance. In Study 2, to test if a firm’s competitive advantage can be sustained through building best-value supply chains, a long-run performance analysis is conducted, which is based on a stock portfolio of firms identified from the American Marketing Association’s annual list of “Supply Chain Top 25.” Findings – The results of Study 1 indicate that the three qualities of best-value supply chains are positively related to firms’ competitive performance. The results of Study 2 show that firms having best-value supply chains generate significant and positive abnormal returns for shareholders over time. Originality/value – This is a multiple-method research, providing two-level empirical evidence to the investigation of theoretical linkage between best-value supply chains and firms’ competitive performance.

Determinants of stock market reaction to cross-border acquisitions: evidence from emerging economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samta Jain ◽  
Smita Kashiramka ◽  
P. K. Jain
Keyword(s):  
Emerging Economies ◽  
Value Creation ◽  
Global Economy ◽  
Emerging Market ◽  
Research Work ◽  
Abnormal Returns ◽  
Content Type ◽  
Cross Border ◽  
Country Level ◽  
Acquiring Firms

PurposeThe global economy has witnessed an exponential increase in cross-border acquisitions (CBAs) by emerging market companies (EMCs), demanding a relook at their internationalization strategy. The purpose of the study is to investigate whether the announcement of CBAs by EMCs creates value for the equity-holders of acquiring firms and identify factors affecting the valuation of acquiring companies.Design/methodology/approachThe paper investigates the announcement impact of CBAs of CNX Nifty 500 Indian and SSE 380 Chinese companies. The event study analysis of 553 Indian and 125 Chinese acquisitions supports the contention that CBAs are indeed a strategic choice of EMCs for value creation.FindingsCBAs generate positive and statistically significant abnormal returns for shareholders of both Indian and Chinese acquirers. The markets, however, differ in terms of their motivations; country-level factors have been observed to exert significant influence on the returns of Indian acquirers. Indian companies experience larger value creation on acquiring firms established in developed, institutionally closer and/or economically distant markets. The findings support the asset-seeking motive of Indian companies.Originality/valueThe research work contributes to the evolving stream of CBAs literature with a focus on the globalization strategies of EMCs. The present study is a modest attempt to lay the foundation for a new theoretical framework (asset-seeking perspective) of overseas acquisitions from emerging economies. The existing studies on emerging economies have emphasized, in isolation, either Indian CBAs or international acquisitions by Chinese firms. Being so, the study is unique and original in the sense that it is a comparative study of India and China.

The Effects of Goodwill Tax Deductions on the Market for Corporate Acquisitions

2000 ◽  
Vol 22 (s-1) ◽  
pp. 34-50 ◽  
Author(s):  
Benjamin C. Ayers ◽  
Craig E. Lefanowicz ◽  
John R. Robinson
Keyword(s):  
Firm Characteristics ◽  
Target Firm ◽  
Corporate Acquisitions ◽  
Public Firms ◽  
Acquiring Firms ◽  
Tax Deductions ◽  
Tax Benefits ◽  
The Impact ◽  
Tax Deduction ◽  
Purchased Goodwill

We analyze the effect of the tax deduction for goodwill amortization provided by the Omnibus Budget Reconciliation Act of 1993 (OBRA) on the market for corporate acquisitions. We analyze a sample of taxable corporate acquisitions, including acquisitions of subsidiaries, private firms, and public firms, occurring over the period 1990 through 1996. We assess the impact of the goodwill legislation by (1) quantifying the frequency and size of qualifying acquisitions and comparing these acquisitions to nonqualifying acquisitions pre- and post-OBRA and (2) investigating if and how the goodwill amortization deduction influenced the premium paid for qualifying corporate acquisitions. We estimate a regression of acquisition premiums on target-firm characteristics including a proxy for purchased goodwill. We find that acquisitions qualifying for goodwill amortization comprise less than 17 percent of sample taxable corporate acquisitions before OBRA, and this percentage does not increase after the enactment of OBRA. Nonetheless, our regression results indicate that the OBRA goodwill provisions did contribute to a significant increase in acquisition premiums associated with purchased goodwill for qualifying transactions. Thus, rather than operate as a subsidy to acquiring firms, we find that a majority of the tax benefits associated with the goodwill amortization deduction accrues to target-firm shareholders.

Consumers’ reactions to cross-border acquisitions

2019 ◽  
Vol 122 (2) ◽  
pp. 655-677
Author(s):  
Riccardo Resciniti ◽  
Michela Matarazzo ◽  
Gabriele Baima
Keyword(s):  
Experimental Design ◽  
Corporate Reputation ◽  
Design Methodology ◽  
Consumer Perceptions ◽  
Psychic Distance ◽  
Target Firm ◽  
Content Type ◽  
Cross Border ◽  
Acquiring Firms

Purpose The purpose of this paper is to focus on consumers’ reactions to cross-border acquisitions (CBA) by exploring the role of consumer perceptions of the psychic distance between the country of the acquirer and that of the target firm when the acquiring corporation has a good or poor reputation. Design/methodology/approach A 2×2 experimental design which manipulated psychic distance and acquirer’s corporate reputation was conducted in Italy. The study considers an Italian food target firm and compares four foreign acquiring firms with different combinations of corporate reputation (good/poor) and psychic distance to Italy (small/large). Findings The authors found that the degree of psychic distance between the countries of the acquiring and targeted firms was inversely related to Italian consumers’ intentions to repurchase the products of the post-acquisition target, and unrelated to the acquirer’s corporate reputation. Originality/value This is the first study focusing on psychic distance in the context of CBA, especially from the perspective of consumer behavior, which can help to better understand certain negative reactions toward the acquisition of a business.

scholarly journals Insider Trading and the Classification of Seasoned Equity Offerings: Evidence from Taiwan

2017 ◽  
Vol 9 (5) ◽  
pp. 58 ◽  
Author(s):  
Han-Ching Huang ◽  
Hsiu-Hsin Chiu
Keyword(s):  
Insider Trading ◽  
Abnormal Returns ◽  
Seasoned Equity Offerings ◽  
Growth Potential ◽  
Equity Offerings ◽  
Announcement Effects ◽  
Cumulative Abnormal Returns ◽  
Long Run ◽  
The Impact

This paper investigates whether insider purchasing or selling before Season equity offerings (SEO) announcement have the impact on the cumulative abnormal returns (CAR) around SEO announcement in Taiwan. We find that there are negative announcement effects around the SEO announcement, which is not consistent with the argument that there are usually positive announcement effects around the SEO announcement in Taiwan. Moreover, long-run abnormal returns following SEOs are negative. Therefore, the motivation of SEO has changed from investment to overvaluation.. Although there is net buying prior to SEO announcement, the outside investors still regard SEO announcement as a signal of overvaluation instead of growth potential.

scholarly journals The Impact of Protectionism on the Completion and Duration of Cross-Border Acquisitions

2021 ◽  
Author(s):  
◽  
Rehanna Callaghan
Keyword(s):  
National Security ◽  
Host Country ◽  
Firm Size ◽  
Financial Services ◽  
Foreign Firms ◽  
Gdp Growth ◽  
Target Firm ◽  
Cross Border ◽  
Time Required ◽  
The Impact

<p>This study investigates the impact of protectionism in a host country on the completion likelihood of an announced cross-border acquisition and the time required to complete the acquisition. Adopting a legitimacy perspective, I identify and test boundary conditions at the firm and national levels to study the relationship between protectionism and cross-border acquisition completion and duration. I hypothesise that in host countries with a high level of protectionism, as reflected by the level of non-tariff barriers, cross-border acquisitions are less likely to be completed and the time taken to close the acquisition deal increases. I also propose that the relationships between protectionism and acquisition outcomes are moderated by critical target firm characteristics and the host country's economic condition. Specifically, these moderators include target firm size, target firm performance, the degree to which the target industry is sensitive to national security concerns, and the host country's GDP growth. I test these hypotheses using a sample of 675 cross-border acquisition attempts by firms in the manufacturing and services industries (excluding financial services) into the U.S. and Canada between 1995 and 2015. The results of the statistical analysis support the prediction that the higher the degree of protectionism, the lower likelihood of acquisition completion and the longer the duration is between acquisition announcement and completion. Findings also support the predicted moderating effects of the target firm size, performance and national security concern. However, the hypothesised moderating effect of the host country's GDP growth was not supported by the results. This finding suggests that host country protectionism impacts cross-border acquisition attempts, irrespective of the host country's economic development. These findings have significant implications for legitimacy-based explanations of cross-border acquisitions. In particular, the results of this study indicate that when protectionism is high, the host country is more likely to raise concerns around the legitimacy of foreign firms. In turn, these firms face adverse host country scrutiny which can result in a failed acquisition attempt, or an extended and therefore, costlier acquisition deal. The framework and findings of this study contribute to an institution-based view and, in particular, to a legitimacy-based perspective in the research on the internationalisation of firms.</p>

scholarly journals The Impact of Protectionism on the Completion and Duration of Cross-Border Acquisitions

2021 ◽  
Author(s):  
◽  
Rehanna Callaghan
Keyword(s):  
National Security ◽  
Host Country ◽  
Firm Size ◽  
Financial Services ◽  
Foreign Firms ◽  
Gdp Growth ◽  
Target Firm ◽  
Cross Border ◽  
Time Required ◽  
The Impact

<p>This study investigates the impact of protectionism in a host country on the completion likelihood of an announced cross-border acquisition and the time required to complete the acquisition. Adopting a legitimacy perspective, I identify and test boundary conditions at the firm and national levels to study the relationship between protectionism and cross-border acquisition completion and duration. I hypothesise that in host countries with a high level of protectionism, as reflected by the level of non-tariff barriers, cross-border acquisitions are less likely to be completed and the time taken to close the acquisition deal increases. I also propose that the relationships between protectionism and acquisition outcomes are moderated by critical target firm characteristics and the host country's economic condition. Specifically, these moderators include target firm size, target firm performance, the degree to which the target industry is sensitive to national security concerns, and the host country's GDP growth. I test these hypotheses using a sample of 675 cross-border acquisition attempts by firms in the manufacturing and services industries (excluding financial services) into the U.S. and Canada between 1995 and 2015. The results of the statistical analysis support the prediction that the higher the degree of protectionism, the lower likelihood of acquisition completion and the longer the duration is between acquisition announcement and completion. Findings also support the predicted moderating effects of the target firm size, performance and national security concern. However, the hypothesised moderating effect of the host country's GDP growth was not supported by the results. This finding suggests that host country protectionism impacts cross-border acquisition attempts, irrespective of the host country's economic development. These findings have significant implications for legitimacy-based explanations of cross-border acquisitions. In particular, the results of this study indicate that when protectionism is high, the host country is more likely to raise concerns around the legitimacy of foreign firms. In turn, these firms face adverse host country scrutiny which can result in a failed acquisition attempt, or an extended and therefore, costlier acquisition deal. The framework and findings of this study contribute to an institution-based view and, in particular, to a legitimacy-based perspective in the research on the internationalisation of firms.</p>

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