Cross-Border Acquisitions and Target Firms' Performance

2013 ◽  
pp. 347-385 ◽  
Author(s):  
Kyoji Fukao ◽  
Keiko Ito ◽  
Hyeog Ug Kwon ◽  
Miho Takizawa
Keyword(s):  
Cross Border ◽  
Target Firms

Cross-Border Mergers and Acquisitions and the Competitive Positioning of European National Industries

1997 ◽  
Vol 2 (4) ◽  
pp. 359-390
Author(s):  
Massimo G. Colombo ◽  
Sergio Mariotti
Keyword(s):  
Mergers And Acquisitions ◽  
Statistical Tests ◽  
Foreign Direct Investments ◽  
Competitive Advantages ◽  
Competitive Position ◽  
Cross Border ◽  
Target Firms ◽  
Eclectic Paradigm ◽  
International Oligopoly ◽  
Tests Of Hypotheses

This paper relies on the eclectic paradigm of foreign direct investments and Porter's theory on the competitive advantages of nations to study the localisation of target firms of international M&As by European enterprises. Firms' propensities towards extra- and infra-European acquisitions are correlated with the competitive position of European national industries in the international arena. Strategic groups of national industries are created through a cluster analysis based on the Fortune lists of the 500 world largest enterprises. Logit econometric estimates and statistical tests of hypotheses suggest that the share of extra-European acquisitions is greater in a) sectors where European large firms have achieved leadership of the world oligopoly, and b) sectors where the competitive position of Europe is rather weak though stable. Instead, firms belonging to national industries which have been rapidly increasing their share of the international oligopoly during the ′80s concentrate their M&As within Europe. The same holds true for declining weak competitors.

Cross-Border LBOs, Human Capital, and Proximity: Value Addition through Monitoring in Private Equity Investments

2020 ◽  
pp. 1-41
Author(s):  
Thomas J. Chemmanur ◽  
Tyler J. Hull ◽  
Karthik Krishnan
Keyword(s):  
United States ◽  
Human Capital ◽  
Initial Public Offering ◽  
Private Equity ◽  
The United States ◽  
Efficient Allocation ◽  
Value Addition ◽  
Cross Border ◽  
Target Firms ◽  
Public Offering

We show that cross-border leveraged buyout investments involving U.S. rather than non-U.S. private equity (PE) investors are more likely to have a successful exit (initial public offering or acquisition). Exogenous increases in effective proximity following the signing of “open sky agreements” between the United States and target firms’ home countries increases both the propensity of U.S. PE firms to invest in these firms and the value addition by these investors. We show that such increases in value addition by U.S. PE investors following proximity increases are at least partially due to better monitoring, facilitated by the more efficient allocation of experienced U.S. PE managers to cross-border deals.

scholarly journals Domestic versus cross-border acquisitions: which impact on the target firms’ performance?

2008 ◽  
Vol 40 (17) ◽  
pp. 2221-2238 ◽  
Author(s):  
Olivier Bertrand ◽  
Habib Zitouna
Keyword(s):  
Cross Border ◽  
Target Firms

Cross-border mergers and acquisitions: links between acquiring firm capabilities and resources and target country location

2020 ◽  
Vol 28 (3) ◽  
pp. 355-379
Author(s):  
Ronaldo Parente ◽  
Keith James Kelley ◽  
Yannick Thams ◽  
Marcelo J. Alvarado-Vargas
Keyword(s):  
Target Firm ◽  
Firm Capabilities ◽  
Content Type ◽  
Cross Border ◽  
Acquiring Firms ◽  
Target Firms ◽  
Innovative Capabilities ◽  
Eclectic Paradigm ◽  
Country Selection ◽  
Target Country

Purpose Drawing upon the eclectic paradigm and the regulative dimension of institutional distance theory, it is posited that to understand a firms’ cross-border merger and acquisition (CBMA) location choices, it is critical to examine the acquirers’ ownership advantages. Design/methodology/approach Using a sample of CBMAs undertaken by US firms from 1999 to 2015, the paper explores the extent to which acquiring firm ownership advantages – financial and innovation capabilities – influence target firm country selection in relation to regulative distance. Findings It is shown that acquiring firms with greater innovative capabilities are likely to choose target firms in nations with less regulative distance from their home market; whereas firms with greater financial capabilities target firms in more distant nations. Originality/value This paper builds on the important research on CBMA activity, focusing on the largely neglected pre-acquisition resources in relation to the regulative distance between target firms and the acquirer.

Regional equity market conditions and cross-border mergers and acquisitions (M & A)

2015 ◽  
Vol 10 (3) ◽  
pp. 535-559 ◽  
Author(s):  
K. Smimou
Keyword(s):  
Emerging Markets ◽  
Equity Market ◽  
Market Conditions ◽  
Market Reactions ◽  
Content Type ◽  
Real Effects ◽  
Regional Equity ◽  
Cross Border ◽  
Target Firms ◽  
The Impact

Purpose – Do regional equity market conditions (bear market) affect the financial performance of firms involved in cross-border mergers and acquisitions (M & A)? If so, is there a clear difference between inward and outward M & A in selected regions? The author addresses these questions using a sample of cross-border M & A between 1990 and 2013 in three major geographical regions of the emerging markets: Brazil, Russia, India, and China (BRIC), Eastern Europe, and Africa. The author finds that regional equity market conditions – such as bear equity conditions – along with direction of the cross-border M & A (inward vs outward), and differences in economic fundamentals among these regions carry valuable information and have real effects on market reactions to the announcement of cross-border M & A transactions. The paper aims to discuss these issues. Design/methodology/approach – Using an empirical approach, the author takes a regional perspective, with emphasis on three regions (BRIC, Eastern Europe, and Africa), and aim to determine the impact of the state of the regional equity market (bear stock market), and direction and duration of the M & A on market reactions to the announcement of cross-border M & A. Findings – The author documents the impact of regional equity market conditions on the financial performance of firms involved in cross-border M & A. The author underlines that differences in economic fundamentals among regions carry valuable information and have real effects on the performance of target firms. Practical implications – On the one hand, merger arbitrage investors are keen to learn how to profit and position their investments accordingly during those periods. Therefore, this study has also put the limelight on the underlying factors that influence the market reaction around the M & A announcement at the regional level and clearly shows the additional benefits of regional market conditions, direction of the transactions, and the timing to highlight the positive gain of those equity investments regarding the emerging markets. On the other hand, as the purpose of the study is to delve into the market reactions to the M & A announcement while taking into consideration some relevant factors such as regional equity market conditions to assist companies’ managers and CEOs to effectively choose the right time. Social implications – By incorporating the result presented in this study, another “family” of mutual funds, beyond just the combination of risky assets and the riskless asset is being introduced. Those investment portfolios which take into account merger and/or any opportunistic strategies are tailored more to the needs of various clienteles. For assisting the analyst and portfolio manager, the intuitive character of the result makes it versatile and easy to use by investment firms as an additional decision tool. Originality/value – To the author knowledge, this is the first study that delves into the market performance of companies involved in cross-border M & A in the emerging markets by taking a regional perspective and aiming to determine the impact of the state of the regional equity market (bear stock market) on the M & A. It offers additional support to those institutional investors who are pursuing international diversification across various countries including emerging markets such that bear equity conditions (recessions in the regional stock markets) have an additional negative impact and a real effect on the performance of target firms.

scholarly journals Do cross-border acquisitions create more shareholder value than domestic deals for firms in a mature economy? The Japanese case

2018 ◽  
Vol 15 (3-1) ◽  
pp. 268-281
Author(s):  
Kotaro Inoue ◽  
Robert Ings
Keyword(s):  
Economic Growth ◽  
Slow Growth ◽  
Shareholder Wealth ◽  
G7 Countries ◽  
Cross Border ◽  
Acquiring Firms ◽  
Target Firms ◽  
The Us ◽  
Shareholder Wealth Effect ◽  
Us Financial Crisis

In this paper, we analyse the shareholder wealth effect in domestic and cross-border acquisitions involving Japanese acquiring firms over the period from 2000 to 2010. The results of our study reveal that cross-border acquisitions create larger returns for the acquirers’ shareholders than domestic deals. Furthermore, although acquisitions of firms in G7 countries create larger value than other acquisitions in the period between 2000 and 2003, in the period between 2008 and 2010, which corresponds to a period of slow economic growth in G7 countries after the US financial crisis, acquisitions involving target firms in non-G7 countries created greater wealth gains for shareholders than deals that targeted firms in G7 countries. Our results highlight the growing importance of M&A target firms in growing markets for mature firms in advanced and slow-growth economies.

Resilience and risks of cross-border mergers and acquisitions

2019 ◽  
Vol 27 (4) ◽  
pp. 427-450 ◽  
Author(s):  
Ching-Chiu Hsu ◽  
Jeong-Yang Park ◽  
Yong Kyu Lew
Keyword(s):  
Risk Management ◽  
Mergers And Acquisitions ◽  
Mobile Phone ◽  
Design Methodology ◽  
Organizational Resilience ◽  
Acquisition Performance ◽  
Content Type ◽  
Cross Border ◽  
Multiple Risks ◽  
Target Firms

Purpose In cross-border mergers and acquisitions (M&As), acquirers often fail to achieve the expectations they held when they made the M&A deals. This paper aims to propose that the risks of cross-border M&As can be mitigated by building and cultivating organizational resilience as a prime means of risk management. Design/methodology/approach The research examines risks associated with cross-border M&A and how such risks can be mitigated by developing resilience. It presents dual cases of acquisitions of the biggest branded mobile phone manufacturer in Taiwan. Findings The authors find that the acquirer faces multiple risks in cross-border M&A transactions, including financial, strategic and organizational, and process risks that arise from misalignment between the goal of the M&As and the post-acquisition performance of the target firms. Originality/value The research provides theoretical insights on organizational resilience and how it can mitigate the specific risks involved in cross-border M&As, thereby developing coherent organizational resilience processes.

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