Impact Signals: A Study on Emerging Market Multinationals’ Ownership Strategies in Advanced Markets

Abstract

Drawing on signaling and institutional theory, we perform an analysis of emerging market multinational enterprises’ ownership strategies in advanced markets. Specifically, we claim that experience-related information, i.e. signals, disseminated by the acquirer will decrease information asymmetry on the target side of the deal, leading to majority acquisitions. Furthermore, we find that informal institutional distances decreases the positive impact of signals and formal institutional distance further decreases the negative impact of signals, enhancing our understanding of the boundary conditions of the signal environment as well as how emerging market acquirers can navigate their actions in advanced markets. We rely on a dataset of over 2,000 acquisitions undertaken by acquirers from emerging markets in advanced markets during the period 1999-2017.