Border Acquisitions Research Articles

Inward internationalization and cross border acquisitions by emerging economy multinational enterprises: The moderating role of family and institutional ownership

Inward internationalization and cross border acquisitions by emerging economy multinational enterprises: The moderating role of family and institutional ownership

Analysis of Cross Border Acquisitions of Chinese Clothing Enterprises - Taking ANTA Sports as an Example

Against the backdrop of China's rapid economic development shifting towards high-quality development, many Chinese enterprises have the willingness and ability to develop cross-border. ANTA Sports, a sports brand in the clothing industry, is such a leading enterprise that has greatly increased brand value and revenue through cross-border acquisitions. It can be said that ANTA Sports has successfully moved from China to the world. This article analyzes the current research situation, recent acquisition trends of ANTA Sports, and the financial situation of the enterprise, and discovers the prominent characteristics of ANTA Sports cross-border acquisition and its positive impact on the development of ANTA Sports enterprise. It also draws some inspiration about the strategy, innovation and developing trend for the internationalization development of Chinese enterprises.

Deal completion in cross border acquisitions waves: The role of deal timing and pace

AbstractResearch SummaryCross‐border acquisitions (CBAs) exhibit a wave‐like pattern, clustering temporally, industry‐wise, and at the country level. We draw upon the bargaining power perspective and argue that CBA wave context alters the relative bargaining position between acquirer and target firms, which affects deal completion. Our findings suggest that acquisition wave deals have a lower likelihood of completion compared to non‐wave deals. However, within a CBA wave, we find that acquirers that move early and with a high acquisition pace have a higher likelihood of deal completion. We test our arguments on a simulation‐based dataset comprising 17,815 wave and non‐wave deals identified between 1990 and 2012 across 13 acquirer and 21 target countries. We contribute to the CBA literature by differentiating between wave and non‐wave environments and their impact on deal completion.Managerial SummaryCross‐border acquisitions (CBAs) often happen in waves that emerge at the industry and country‐levels. These waves are characterized by heightened level of acquisition activities such that the relative position of acquirer and target firms is different within waves as compared to outside of the waves. As a result, acquisition deals announced within waves are less likely to be completed than those announced outside of the waves. At the same time, acquiring firms that announce acquisitions at an early stage within a CBA wave and move with a faster speed to conduct more acquisitions are more likely to successfully close the deals than other firms.

Institutional distance and ownership in foreign acquisitions

In this study, we take a balanced view on cross-border distances and argue that there are both costs and benefits when multinational companies (MNCs) operate in distant environments. When conducting cross border acquisitions (CBAs), MNCs attempt to minimize the costs while also maximizing the benefits offered by institutionally distant host countries. MNCs do so by sharing the equity ownership with the local partners who help MNCs navigate the local environment and derive location-specific advantages. We also propose that the effect of institutional distance is directional such that firms are more likely to opt for shared ownership when the target is located in a country with less developed institutions than in a country with more developed institutions. Further, firm-specific and context-specific factors impact the costs and benefits of operating in distant countries and condition the relationship between institutional distance and the likelihood of a firm opting for shared ownership in CBAs. We test our arguments on a sample of 37,588 CBAs involving 52 home and 54 host countries over 17 years (1996–2013).

Determinants of a Cross Border Merger and Acquisition Decision: A Literature Review

This paper aims to explore, consolidate, and comprehend the determinants that impact a cross border merger and acquisition decision. We mainly research past studies performed in the last decade that have identified several factors affecting the merger decision. By integrating the research findings from prior research, we propose developing a clear understanding of the factors that determine a merger decision. Many factors like characteristics of the CEO of the target and the acquiring company have also been summarized in this paper, which have not been consolidated by previous studies. Studying the market and economic conditions of host and home countries can provide an insight into the investment decision. This can apprise policy makers, investors, and stakeholders to work on policies and regulations that would boost inward and outward deals.

Do cross border acquisitions increase shareholder's wealth The case of Indian pharmaceutical firms

Indian pharmaceutical firms have been on an acquisition spree and witnessed around 216 cross border acquisition deals worth more than $11,350 million during January 2005 to March 2019.1 The primary motive of this study is to analyse the impact of cross border acquisition (CBA) announcements on the short-run abnormal returns to Indian acquirers in the pharmaceutical sector. This study applied event study methodology and analysed 55 CBAs that happened in 24 foreign markets by 27 Indian pharmaceutical firms, from the year 2005 to 2018. Both parametric and non-parametric tests were applied to examine the robustness of abnormal returns. It was found that the announcements of foreign acquisitions by Indian pharmaceutical firms have created wealth gains for the shareholders. Further, there is strong evidence that Indian pharmaceutical firms experience significant positive abnormal returns surrounding the acquisition announcements of target firms in the developed markets and in contrast experienced insignificant negative abnormal returns when the acquired target firms were based in developing markets.

Strategic Asset-Seeking During in a Cross Border Acquisition Wave

Cross border acquisition (CBA) waves are periods of concentrated acquisition activity characterized by a cyclical pattern. These waves are triggered by exogenous shocks and provide a time bound window for firms to respond either by seeking newer markets or by upgrading themselves by acquiring strategic assets. We draw on the extant literature that emphasizes the challenges faced by emerging markets firms in pursuing cross border acquisitions. Our findings suggest a U-shaped relationship between entry timing within a wave and strategic asset-seeking acquisitions, which is driven by a trade-off between acquisition of high quality assets and reduction in uncertainty surrounding the acquisition deal. Further, acquirer’s ownership structure conditions the relationship between entry timing and acquisition motives. Specifically, business group affiliation and foreign institutional ownership strengthen the relationship between timing within a CBA wave and strategic asset-seeking motive. Our findings, based on a sample of Indian acquirers provide robust support to our theoretical arguments.

Effect of Cross Border Acquisitions on R&D Investments: An Emerging Market Perspective

Emerging economy firms use cross-border acquisitions for building new technological capabilities and augmenting their internal research and development (R&D) efforts, thus enabling them to strengthen their capabilities. Little is known whether the investment in cross-border acquisitions by emerging economy firms complements or substitutes for the internal R&D investment. Based on a panel data set of 296 Indian firms over a period of 13 years, we find empirical evidence that investments in cross border acquisitions complement internal R&D investments initially, but substitute internal R&D efforts at higher values of such investments. Both investments (R&D and cross-border acquisitions) complement, then substitute each other over a higher range for technology-intensive firms as compared to firms in the non-technology sectors. Further, investments in cross border acquisitions complement a firm’s internal R&D efforts in presence of high international product-market experience.

Family firms and their participation in cross-border acquisition waves: evidence from India

PurposeFrom the socioemotional wealth (SEW) perspective, family firms prioritize non-financial goals and show risk averse behaviour towards conducting acquisitions. In this paper, we study family firms' acquisitive behaviour while participating in CBA waves. Scholars have largely treated the cross border acquisition (CBA) wave and non-wave environments as homogeneous. We theorize that these two environments differ in their uncertainty and risk profiles on account of temporal clustering of acquisition deals. Accordingly, based on the SEW perspective, we examine the preference of family firms to participate in CBA waves.Design/methodology/approach The paper is based on CBAs conducted by Indian family firms between 2000 and 2018. These waves are identified by conducting a simulation based methodology.FindingsOur findings suggest that foreign institutional ownership, firm age and acquisition relatedness moderate the relationship between family control and participation in CBA waves.Originality/valueOur paper contributes towards the acquisitive behavior of family firms and their participation in CBA waves.

Investigating employee and organizational performance in across‐borderacquisition—A case of withdrawal behavior

AbstractOver the last two decades, performance management systems (PMSs) have been the focus of increasing attention. However, scant research has examined the link between individual‐ and organizational‐level performance in the context of cross‐border mergers and acquisitions. Employee withdrawal adversely affects organizations, and has thus been associated with negative consequences for organizations and regarded as a counterproductive work behavior. Our article presents an empirical investigation of determinants and consequences of employee withdrawal, and its impact on willingness to share tacit knowledge, knowledge transfer, and cross‐border acquisition performance in the context of Chinese acquisitions in the UK. Based on a cross‐sectional survey of 103 employees of an UK subsidiary and Chinese acquiring firm, we found that trust in the acquiring firm significantly reduces acquired firm employee withdrawal behaviors. Moreover, our findings indicate that employee withdrawal behaviors negatively impact employee willingness to share tacit knowledge. The findings further confirm that such willingness positively influences knowledge transfer, which, in turn, has a positive effect on cross border acquisition performance. Our article contributes to the PMS literature by enhancing the understanding of the process through which human resource management systems affect outcomes at different levels of analysis in the context of the cross‐border acquisitions.

Cross border acquisitions and cultural proximity effect: The case of Morocco

Cross border acquisitions and cultural proximity effect: The case of Morocco

An Overview of Cross-Border Acquisitions: A Study on Turkish Companies in the Period 1998-2018

Sınır ötesi gerçekleştirilen şirket satın alma faaliyetleri tüm dünyada olduğu gibi Türk şirketlerinin de ilgisini çekmektedir. Bu çalışmanın amacı ise, hedef ya da alıcı şirketlerden birinin Türk diğerinin yabancı olduğu satın alma faaliyetlerini incelemek ve genel bir çerçeve sunmaktır. Bu çalışmada kullanılan veriler Zephyr isimli veri tabanından elde edilmiştir. 1998-2018 yılları arası yirmi yıllık dönem içerisinde gerçekleştirilen Türklerin yurt dışında yaptığı 275 işlem ile yabancı firmaların Türkiye’de gerçekleştirdiği 883 satın alma işlemi araştırmanın kapsamını oluşturmuştur. Yapılan analizlerin sonucu satın alma işlemlerinin genellikle Avrupalı firmalarla gerçekleştirildiğini göstermiştir. İşlem sayısı ve işlem hacmi yıllar itibariyle değişkenlik göstermektedir. En fazla satın alma faaliyetinin gerçekleştirildiği sektörler finans ve imalat sektörleri olarak dikkat çekmektedir. Genel olarak yatay olmayan satın alma işlemlerinin yatay satın alma işlemlerine göre daha fazla sayıda olduğu görülmüştür.

Cross-Border Acquisition Performance of EM MNEs: The Moderating Role of State-Ownership & Performance

This paper draws on the resource-based view and organisational learning theory to analyse the moderating role of state ownership and acquisition experience for firm performance of emerging market multinational enterprises (EMNEs). We contribute to the evolving literature on state-owned EMNEs by identifying various post cross- border acquisition (CBA) strategies, which differ in their impact on performance compared with privately owned EMNEs. We test our hypotheses using panel regression analysis on a large firm-level dataset spanning 43 emerging markets over the period 2006-2015. Overall, our findings indicate an inverted U shape relationship between diversification through CBAs and firm performance. More specially, this concave relationship is greater in the case of diversification that occurs in developed countries (DCs) compared with diversification in emerging markets (EMs). Furthermore, these relationships are moderated, albeit at different levels, by state- ownership and the EMNE acquisition experience both in the domestic and foreign markets.

It’s Time for Me to Shine: Narcissistic CEOs and Distance in Cross- Border Acquisitions

This study examines how CEOs narcissism affects the internationalization decisions of the firms. We propose a novel approach for measuring CEO narcissism, based on the choice of words used by CEOs during the quarterly earnings conference calls that they hold with stock market analysts. We find that highly narcissistic CEOs choose countries which are more distant in terms of culture, political structure, geography, and economic development.

Bidder Value Implications of Cross-Border vs Domestic Acquisitions: A Study of Dutch Firms

This study aims to investigate the value implications of cross-border as well as domestic acquisitions which are undertaken by Dutch bidding firms. This study focuses on Dutch firms since the Netherlands is one of the world’s largest sources of cross-border investments, and cross-border acquisitions are a prime example. Past literature which focuses on different regions/countries discovered conflicting findings regarding value implications of cross-border and domestic acquisitions. Some recorded results which pointed towards value creation for cross border acquisitions while some found the opposite. This study utilizes the event study methodology to find out whether cross-border and domestic acquisitions create significant value right after the announcement of the acquisition. This is done by testing the significance of the Cumulative Average Abnormal Returns (CAARs) of 62 cases of acquisitions, comprised of 31 cross-border and domestic acquisitions, all involving a Dutch bidding firm. The significance tests yielded statistically insignificant results for all the groups of samples. However, the CAARs themselves were positive for the cross-border acquisitions and also positive but lower for domestic acquisitions. The unexpected results led to the conclusion that there is weak support towards the value creating nature of cross border acquisitions and that engaging in a domestic acquisition instead also does not guarantee value creation, while further inspection discovered that the firms’ strategy may also play a role in the Dutch acquisition’s value creation.

KARAKTERISTIK BANK TARGET AKUISISI ASING (CROSS-BORDER) DAN DOMESTIK PADA PERBANKAN INDONESIA

The aims of this paper were to study the difference in the characteristic of acquisition target bank for cross-border and domestic over the period of 2002 – 2017 in Indonesia banking industry. There were 41 transactions of merger and acquisition during the period, and hence there was 31 ownership of private local banks have been transferred to foreign/cross-border investor. The data was obtained from Otoritas Jasa Keuangan (OJK) consists of financial publication reports of 24 banks sample and also annual reports of those banks. The methods used were descriptive statistics and independent sample test for both parametric and non-parametric data. The results show that: i) There is a significant difference on the profitability (ROE), asset size, cost efficiency, quality of loans, and liquidity between both groups of the target banks; ii) Whereas ROA and capitalization (CAR) are not different for both group of the target banks; iii) Target banks for cross border acquisition is public bank which is different with non-public banks for domestic acquisition.

Do Cross Border Acquisitions Increase Shareholder’s Wealth The Case of Indian Pharmaceutical Firms

Do Cross Border Acquisitions Increase Shareholder’s Wealth The Case of Indian Pharmaceutical Firms

International growth of Italian acquired mid-sized firms: an analysis of post-acquisition performance

The purpose of the paper is analysing the performance differences (labour productivity, employment and wages) of all the mid-sized firms acquired in the period between 1999 and 2009, compared with purely domestic firms (non-acquired), with two specific research focuses: 1) differences between industrial and financial investor; 2) geographic distance between acquirer and target firm. This study conducts a t-test analysis by using firm-level accounting data from the Italian Mediobanca Research Department database. Results suggest that the performance of the acquired firms improve. Furthermore, the results show prospective industrial and European acquirers adopt a cherry picking approach and tend to keep pre-acquisition performance levels unchanged, whereas financial and non-European acquirers take the opposite approach with an explicit view to increase post-acquisition performance. This study for the first time analyses the performance implications of cross border acquisitions of all the acquired mid-sized firms, which carry remarkable economic weight within the Italian economy.

Valuation effects of cultural disparity on cross border mergers: The evidence from India

The object of this study is to explore the effect of cultural distance on both the long run and short run performance of cross border mergers and acquisitions undertaken by Indian acquiring firms. We utilize buy and hold returns (BHAR), cumulative abnormal returns (CAR) and cross-sectional regression analysis in our study. Adopting the traditional Hofstede measure of cultural distance and other pertinent variables, commonly used to measure cultural differences, we document a negative and statistically significant influence of cultural distance on Indian cross-border M&As and corroborate some of other findings reported in prior research. Also, we find that the BHAR is nevertheless higher when the acquisitions are friendly, paid for 100% cash, and the acquiring firm is large, older and belongs to a business group. The inclusion of the variable ‘business group’ along with industry relatedness and acquirer size provides valuable insights into the Indian cross border acquisition landscape, wherein business groups dominate to a great extent.

Post-Acquisition Value Creation in Cross-Border Transactions: Do Board Characteristics Matter?

Our study examines how acquiring firm board characteristics influence the gains that accrue to shareholders following cross- border merger and acquisitions (CBMAs). It is based on a sample of 252 l...