What Determines the Acquirerss Location Preferences and Ownership Outcomes? An Empirical Study of East and Southeast Asian Markets

Abstract

This paper addresses two of the most important questions in the bidder’s acquisition planning: Should they acquire a domestic or cross-border target? Acquire partial- or full-control? In the context of eight East and Southeast Asian countries with a takeover wave following the 1997-1998 Asian financial crisis, it is found that good corporate governance of a target is a significant feature attracting both domestic and cross-border acquirers. However, target firms with poor financial performance are more likely to be acquired by domestic bidders while good-performing firms are more attractive to cross-border bidders. The findings also support the idea that the post-takeover integration process in cross-border takeovers is likely to be more problematic relative to domestic acquisitions and, therefore, the post-acquisition incremental performance improvement is greater for domestic targets compared to cross-border targets. Further, this paper indicates that targets with more independent directors, more powerful CEOs, and greater blockholdings are more likely to be taken over through partial-control rather than full-control acquisitions.