The Shareholder's response to a firm's first international acquisition

Abstract

We identify the first and subsequent acquisitions made by U.S. firms that conduct multiple cross-border acquisitions and provide robust evidence that shareholders realize a statistically significant three-day cumulative abnormal return (CAR) of 1% around the announcement of their first international acquisition. The CAR for the first acquisition is significantly higher than the CAR around the announcement of subsequent cross-border acquisitions and is unique to cross-border acquisitions. Our findings indicate that shareholders of U.S. firms attach a premium to the firm's initial effort to globalize via international acquisitions.