Effects Of Cross-border Acquisitions Research Articles

The Effects of Cross-Border Acquisitions on the Value of Rivals: International Evidence

The Effects of Cross-Border Acquisitions on the Value of Rivals: International Evidence

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.

Surviving after Cross-Border Acquisitions: How Business Relatedness, Host Country Experience, and Cultural Distance Affect Acquired Firms

The effects of cross-border acquisitions on the survival of target firms is attracting increasing academic interest. Specifically, whether cross-border acquisitions may hamper target firms’ performance or enhance their sustainable competitiveness represents a highly debated research question. Building on the knowledge-based perspective of mergers and acquisitions, this paper directs attention to absorptive capacity and investigates the likelihood of survival of target firms acquired by foreign investors. In particular, it examines the role played by three potential antecedent conditions of an acquiring firm’s absorptive capacity on the probability of the target firm’s survival: (a) The business relatedness between acquirer and target, (b) previous experience of the acquirer in the host country, and (c) the cultural distance between the countries of the acquiring and acquired firms. Based on a sample of 396 Italian firms acquired by foreign multinationals, results suggest that target firms are more likely to survive in case the acquirer benefits from previous country-level experience and in case of business relatedness, while the cultural distance between the home country of the acquiring firm and Italy does not prove to be a significant determinant of survival versus mortality of acquired subsidiaries. Overall, our analysis confirms that context familiarity, in terms of both country and business contexts, plays a fundamental role in determining the sustainable competitiveness of acquired firms.

When the Poor Buy the Rich: New Evidence on Wealth Effects of Cross-Border Acquisitions

The growing trend of merging and acquisition (M&A) investments from emerging to developed market economies over the last two decades motivates the question on the long-run effects of M&A on the wealth of emerging markets. This paper contributes to the current literature on cross-border M&A (CBMA) by focusing on the long-term effects of this event on the bidder’s stock return in emerging markets. To address the challenges of finding an accurate measure for the effects, this study applies the propensity score matching framework in tandem with difference-in-differences (DID) on a comprehensive dataset over the 1990–2010 period. The analyses show evidence of systematic detrimental impacts of cross-border M&A on shareholders’ welfare in the long run, to a certain extent, diverging from the existing literature, which mainly highlights the positive effects for certain types of M&A. The striking finding is that such strong negative effects remain persistent even when various factors previously known as capable of suppressing underperformance are considered. Our study is in line with the growing landscape of cross-border mergers and acquisitions from the “poor” to the “rich” countries.

Effect of Cross-Border Acquisitions on Businesses Performance of Slovak Acquiring Companies

Effect of Cross-Border Acquisitions on Businesses Performance of Slovak Acquiring Companies

Are Cross-Border Acquisitions Enemy of Labor? An Examination of Employment and Productivity Effects

We examine the employment, efficiency and productivity effects of cross-border acquisitions using a large sample of targets of cross-border and domestic acquisitions. We find that targets of cross-border acquisitions reduce employment levels more than targets of domestic acquisitions after the acquisition; however, the cross-border targets increase wages more than domestic targets, and this resulted in increased post-acquisition productivity among cross-border targets. After accounting for industry-wide influences, we observe that although targets of cross-border acquisitions were less productive than those of domestic acquisitions before the takeover, their productivity levels improved significantly after the acquisition. In addition, cross-border targets become more efficient than their counterparts acquired by domestic bidders. At the macro level over the long run, cross-border acquisitions are associated with improvements in aggregate labor conditions (i.e., higher wages, lower levels of unemployment, and higher labor productivity). At the same time, firms targeted in cross-border acquisitions have a greater impact on GDP than those targeted in domestic acquisitions. This suggests that cross-border takeovers spur a reallocation of labor that increases aggregate productivity and GDP. This significant contribution is sometimes overlooked in the discourse on the benefits of cross-border acquisitions to the host country.

The Effect of Cross-Border Acquisitions on Shareholder Wealth — Evidence from Switzerland

We analyze the wealth effects of 114 domestic and international acquisitions announced by Swiss corporations between 1990 and 2001. We find no difference between national and cross-border mergers. This may indicate that the international capital markets are highly integrated and is in contrast to recent empirical findings on a prevailing segmentation of capital markets within Europe. We also analyze the role of professional advisors in Swiss M&A transactions. Our results indicate that the expenses for professional advice might outweigh the potential benefits.