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

Abstract

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.