Effects of R&D Investments and Market Signals on International Acquisitions: Evidence from IPO Firms

We investigate how intangible assets in the form of R&D influence firms’ hazards of engaging in international acquisitions. On the one hand, previous research has noted that the tacit and redeployable nature of R&D investments may prompt firms to expand their operations overseas and create value from international acquisitions. On the other hand, it is difficult for other firms to evaluate the quality and prospects of an acquirer’s intangible resources, thereby hampering its ability to finance and execute international M&A deals. In the context of international acquisitions undertaken by firms just completing their initial public offerings (IPOs), we argue and find that the IPO firm’s engagement in post-IPO international acquisition activity is generally negatively related to its R&D intensity. This effect contrasts previous arguments on the internalization advantages possessed by R&D-intensive firms. We also argue that firms able to convey their resources and prospects through such signals as previous international alliances and foreign sales can mitigate information problems presented by their intangibles, and thus carry out and benefit from cross-border acquisitions. We therefore identify an unexamined tradeoff that R&D investments present in the international M&A context and discuss how international signals can facilitate cross-border transactions subject to various market frictions.

Media Exposure and Acquisition Premium Evidence from Chinese Investing Companies

Acquisition deals often draw the attention of the media and the media exposure influences the decisions of stakeholders. Especially attractive in recent years are deals that Chinese companies are investing actively both within China and across the globe. How does media exposure influence the price premium of the target companies that Chinese companies acquire? Building upon the literature of economics and psychology, we develop competing hypotheses on the potential effect. In addition, we argue that the effects of media exposure are different between the Chinese companies’ domestic and international acquisition deals. The data from the recent decade’s transactions indicate that media exposure is associated with the higher premium, supporting the attention-based view. In addition, we hypothesize the effect of media exposure is larger for international deals than for domestic deals. Theoretical and practical implications are discussed.

Domestic growth based on international acquisition – a case study of Fosun tourism group

Purpose In recent years, with the steady growth of China’s economy and world’s vacation market, and powered by the growing and significant large demands of Chinese overseas travel, an emergent trend of international development by major Chinese tourism groups has attracted notice by scholars and practitioners and this is obvious especially in the private sector. With this as the background, this paper aims to explore how China’s leading tourism companies expand their business internationally through a case study approach.