Changing Direction: Cross Border Acquisitions by Emerging Market Firms

Abstract

We examine the patterns of acquisitions by emerging market firms in emerging and developed markets. We show that emerging market firms are becoming increasingly active in targeting companies in developed countries since 1990. The two dominant patterns of emerging market firm acquisitions are mega deals that involve targets from developed markets and serial acquisitions of relatively small targets in emerging markets. We also detect a sharp increase in the average size of acquisitions by emerging market acquirers. Emerging market acquirers experience significant positive announcement returns when the target is from a developed market.