Informativeness of Announcement Returns in Cross-border Acquisition Completion: A Perspective from Emerging Economies

Abstract

This study examines the informative role of announcement returns in the deal-closing decision for cross-border acquisitions from emerging economies. Using a sample of 903 acquisitions from five emerging economies: Brazil, Russia, India, China, and South Africa (BRICS), we find that the likelihood of deal completion increases if the market reacts favorably at the time of announcement. Further, we investigate if the relationship between announcement returns and deal completion becomes more significant under increased information asymmetry. Empirical results attest that the relationship between the market reaction and deal completion becomes more pronounced in unrelated deals and deals without advisors. JEL Codes: G14, G34