International Mergers Research Articles

International Mergers and Acquisitions Laws, the Market for Corporate Control, and Accounting Conservatism

ABSTRACTExploiting the staggered enactment of country‐level mergers and acquisitions (M&A) law as an exogenous increase in corporate takeover threat, this paper examines how a disciplinary market for corporate control affects accounting conservatism. Following M&A law adoption, we find increased accounting conservatism, with more pronounced effects in countries with weak shareholder protection and in those experiencing larger growth in takeover activity. Further analysis reveals that elevated takeover threats increase conservatism through changes in capital structure and investment decisions as well as improvements in board monitoring. Our findings highlight the importance of the market for corporate control in shaping financial‐reporting outcome.

Language Diversity, Nonnative Accents, and Their Consequences at the Workplace: Recommendations for Individuals, Teams, and Organizations

As the workplace is becoming increasingly global, organizations are employing more persons who work in a nonnative language. Moreover, challenges in communication between employees with different linguistic background is inevitable in international mergers and acquisitions, and failure to recognize and address these challenges can create major obstacles to achieving effective integration benefits. Thus, it is imperative for global leaders and managers to understand the effects of language diversity on intraorganizational dynamics. The purpose of this article is to (1) examine the cognitive and affective experiences of both native and nonnative English speakers when they interact with one another and illustrate how language diversity can affect intergroup dynamics in organizations and (2) provide recommendations and interventions to global leaders and managers on how to create a productive and inclusive environment for both native and nonnative language-speaking employees at the individual, team, and organizational level.

Executive migration and international mergers and acquisitions

This study applies the microfoundations approach to examine the impact of migrating executives on firms’ selection of host country in their international acquisition decisions. Viewing executive migration as a conduit for inter-organizational learning, this study offers the first empirical findings that a migrating executive’s inter-organizational learning associated with two specific types of international acquisition experience, i.e., general and country-specific, accumulated at a prior affiliated firm positively impacts host country selection in the executive’s current affiliated firm’s acquisition decisions. The findings further suggest that the migrating executive’s prior country-specific international acquisition experience has a greater influence compared with the migrating executive’s prior general international acquisition experience. Last, the findings show that industry similarity between a migrating executive’s prior and current affiliated firms enhances the effect of the migrating executive’s specific host country acquisition experience. In sum, this study contributes by introducing migrating executives as a new learning conduit in international acquisitions.

International Mergers and Acquisitions Laws, the Market for Corporate Control and Accounting Conservatism

Exploiting the staggered enactment of country-level mergers and acquisitions (M&A) law as an exogenous increase in corporate takeover threat, this paper examines how a disciplinary market for corporate control affects accounting conservatism. Following M&A law adoption, we find increased accounting conservatism, with more pronounced effects in countries with weak shareholder protection and in those experiencing larger growth in takeover activity. Further analysis reveals that elevated takeover threats increase conservatism through changes in capital structure and investment decisions as well as improvements in board monitoring. Our findings highlight the importance of the market for corporate control in shaping financial-reporting outcome.

Home vs. Cross-Border Takeovers: Is There Any Difference in Investor Perception?

This paper attempts to portray the empirical difference in investors' perception towards the cross-border and domestic merger and acquisition (M&A) announcements of UK acquirer firms reflected through the significant abnormal stock return. The researcher conducts a short-run event study on the daily stock return of 100 UK bidding firms (50 involved in domestic and 50 involved in cross-border M&As between 2015 and 2016) to compare any significant abnormal returns (AAR and CAAR) around the event announcement period. National and international mergers and acquisitions have witnessed a considerable expansion globally, with the United Kingdom being one of the pioneers in the worldwide market for corporate domination. Research results exhibit that in domestic M&A bidding, firms experience a significant positive announcement return (CAAR) in the event window (t1 t0) redolent to the positive expectation of investors from the M&A transaction. However, the post-announcement negative return concurrently proves the initial overreaction of investors and the semi-efficient market hypothesis. Foreign M&As result in an insignificant positive return (CAAR) in all the three event windows. There was existence of a positive trend in the cross-border pre-event return (AAR) indicative of narrow possibilities of insider trading or investors' optimistic anticipation, but this is not significantly conclusive.

Successful Human Resources Management Factors in International Mergers and Acquisitions

Mergers and acquisitions (M&A) have received a great deal of attention in academic literature but the role of human resources management in M&A success is still understudied. Of the three stages identified in a merger and acquisition process (planning, integration and implementation), most research focuses on the planning and integration stages. Thus, the aim of this paper is to analyse the main factors that determine the success of HR management in the implementation stage of an international M&A operation: consolidate leadership; human resource provision and evaluation; structure, strategy and culture evaluation; and control of the merger and acquisition process. With this objective, we developed a case study of a multinational company that operates in the mechanical engineering sector. The results illustrate the main factors, human resource practices, and human resources management and behaviour outcomes undertaken by a multinational company during the M&A implementation stage. The case study allows researchers to learn from professionals and business leaders and presents a roadmap that can be considered to manage HR in the M&A process.

Literature review: Tax Planning for International Mergers, Acquisitions, Joint Ventures and Restructurings, P. H. Blessing (editor), 4th ed. Wolters Kluwer, 2017, Two volumes.

Literature review: <i>Tax Planning for International Mergers, Acquisitions, Joint Ventures and Restructurings</i>, P. H. Blessing (editor), 4th ed. Wolters Kluwer, 2017, Two volumes.

Organizational characteristics of cross-border mergers and acquisitions

PurposeGiven that several publicly announced international merger and acquisition deals have been abandoned in recent years, the purpose of this paper is to present a synthesis of influential articles that examine organizational characteristics of cross-border acquisition transactions. The synthesis is framed through general traits and resources, learning and prior acquisition experience, and top-level management and governance attributes. Specifically, the paper conceptualizes key organizational attributes influencing the propensity of cross-border negotiations, and the most common characteristics and post-deal effects by illustrating several case examples from around the world.Design/methodology/approachOwing to fairness and integrity principles of the literature survey studies, the paper adopts an exploratory review design to present a synthesis of several influential articles published in strategy, international business and corporate finance journals. Since case method and storytelling are the best qualitative approaches to conceptualizing extant theoretical contributions, a number of case examples—successful, delayed and abandoned—from around the world have been discussed by leveraging the case information from archival sources.FindingsDrawing on resource-based view, organizational learning, upper echelons and agency theory perspectives, the paper underscores three observations. First, organizational characteristics such as firm age, firm size, ownership structure, slack resources, marketing resources, technological intensity, export intensity and business group affiliation have different impacts on the propensity of publicly announced cross-border deals. Second, firm’s prior acquisition experience and firm’s acquisition experience in the target country have positive or moderating effects on the success of a cross-border merger. Third, top-level management characteristics such as CEO foreign nationality and CEO international career experience, and governance characteristics such as board size, the number of independent directors and directors with overseas experience, have mixed effects on the incidence of cross-border acquisitions.Practical implicationsThe paper puts forth several recommendations for top-level managers participating in cross-border acquisition negotiations, such as learning from peers in the same industry, learning from predecessors in the target country and learning from failure negotiations in the same industry and other industries.Originality/valueNested within the organizational, international business strategy and corporate finance literature, the paper presents a synthesis of influential publications that study organizational characteristics affecting the propensity of cross-border acquisitions. The cases discussed in this paper are unique examples from around the world.

A GLOBALIZAÇÃO E A DIVULGAÇÃO DA PESQUISA CIENTÍFICA: CONCENTRAÇÃO DE EDITORAS E IMPLICAÇÕES SOBRE DIFERENTES CAMPOS DA CIÊNCIA

No mundo globalizado, crescem as fusões de corporações no sentido de unificar os mercados em escala planetária. A divulgação do conhecimento científico não foge a esse padrão.Artigo publicado em 2015 na conceituada revista científica PlosOne, abordando a consolidação da indústria editorial científica no período de 1973 a 2013, mostra o crescimento de seis editoras comerciais – Elsevier, Blackwell, Springer, Taylor &amp; Francis, American ChemicalSociety e Sage –,em especial a partir de incorporações de editoras menores. Em 2013, cinco desses editores cobriam mais da metade de todos os trabalhos divulgados através da Web of Science. Tal concentração editorial se expressa de modos diferentes nos distintos campos de produção do conhecimento científico.Seguindo por caminhos muito distintos desses que marcam as grandes fusões internacionais, DEMETRA situa-se na contramão dos interesses comerciais, estando nossos esforços editoriais dirigidos ao fortalecimento da ciência, seja ela já consolidada ou em seus encaminhamentos iniciais. Temos promovido, anualmente, chamadas para números temáticos voltados para o campo das Humanidades. E estamos abertos a iniciativas similares em outros espaços da ciência, guardando os princípios do acesso aberto na disseminação do conhecimento científico.DOI: 10.12957/demetra.2018.32191

THE INTERNALIZATION OF TNC’S PRODUCTION: FINDINGS FOR UKRAINIAN BUSINESS

The article deals with mergers and acquisitions as modern strategies of TNCs internationalization. The positions of Ukrainian capital on international mergers and acquisitions’ market are explored. The peculiarities of foreign investors' activity in the different sectors of the national economy are determined. The factors preventing national companies from gaining competitive advantages on the world market are outlined.

Los efectos de la red mundial de fusiones y adquisiciones sobre la inversión: un estudio para América Latina

This article studies the determinants of Foreign Direct Investment (FDI) in Latin America from a novel perspective. It shows that the so-called transfer and trust effects, defined by each country’s position in the international mergers and acquisitions network, have a positive influence on foreign investment inflows. Social network analysis is used to quantify both transfer and trust effects, and models with panel data are applied to estimate the influence of such variables on the receipt of financial flows. The results confirm that both trust and transfer effects have positive influences on FDI inflows. The models also identify groups of countries with clear differences in this relationship

Perceptions of justice and organisational commitment in international mergers and acquisitions

PurposeAlthough there is substantial and accumulating evidence on the link between market entry modes and performance, evidence regarding their impact on employee’s perceptions and thereby their commitment is scarce. This is more so in mergers and acquisitions (M&As) where employee’s commitment has a significant impact on post-entry performance. The purpose of this paper is to examine the association between perceptions of justice and organisational commitment in cross-border M&As.Design/methodology/approachThe authors draw on market entry and M&As’ literature and studies on the link between perception of justice and commitment to develop the hypotheses. The authors test the hypotheses with survey data from a merger of two culturally different partners – British and Japanese. A total of 128 responses were received, out of a sample of 151 non-managerial employees within the firm.FindingsThe results show a strong association between employees’ perceptions of justice during the merger and commitment to the new organisation. Surprisingly, the results do not support the widely reported interaction effects between different organisational justices and employees’ commitment.Research limitations/implicationsObtaining data from a single M&A is a potential limitation of this study.Practical implicationsThe study underscores the importance of post-market entry. The results suggest that particular attention needs to be paid to the way employees of the acquired firm are treated during their interactions with their counterparts.Originality/valueThe link between market entry and performance is well documented. However, little progress has been made in understanding the antecedents/factors that influence commitment in foreign market entry and in particular cross-border M&As. This study helps close this gap.

Partial or total integration in a cross‐border merger? Building a Nordic bank culture

The rate of failure for international mergers and acquisitions (M&amp;As) is exceptionally high, since the integration of merging firms does not function well. Using a process perspective, this study aims to analyze the integration process in a cross‐border merger and the development of a common organizational culture. A framework based on premerger cultural and organizational fit, synergy, and resulting organizational culture is developed to study the growth of Nordea, a merger of four Nordic banks. Data include in‐depth interviews and secondary sources. This case study shows how cultural and managerial differences are dealt with and synergies realized. Building a broad organizational culture involving human resource management, decision making, technology, competitiveness, and customer relationships is necessary for merger integration, but it is costly and difficult. We suggest that success in mergers lies in managers creating a new cultural identity with unique values and perspectives.

Leveraging Managerial and Innovation Resources in International Mergers and Acquisitions

International mergers and acquisitions can serve as mechanisms for innovation, knowledge dissemination, and technology enhancement at the interface between organizations and also between nations. We conceptually and empirically examine interconnected innovation, internationalization, technology management, and organizational context and leadership in technology-oriented acquisitions based on a case study of an EMNC enacting 38 cross-border and high-tech acquisitions between 1997 and 2016. The M&A program enhanced the globalization, technology resources, and market competitiveness of the firm, demonstrating the efficacy of an active innovation orientation and knowledge management approach even in a non- high-tech firm. In completing the innovation and internationalization expansion, the firm transformed itself into not just a high-performing member of its nominal industry–logistics–but into a form of high-tech firm, as evidenced by the emphasis on technology resources and innovation management within the firm.

Picking cherries or lemons: A unified theory of cross‐border mergers and acquisitions

AbstractThis article provides a theoretical framework that enhances understanding of empirical evidence suggesting that international mergers and acquisitions, a key source of foreign direct investment, seemingly target in‐country firms that are at the extremes of the productivity spectrum—either high‐productivity firms, so‐called cherries, or low‐productivity firms, the “lemons.” The framework demonstrates that foreign firms with intermediate inputs seek high‐productivity domestic firms, while foreign firms with managerial expertise seek low‐productivity domestic firms. We also show that because of the difference in available outside options, high‐productivity domestic firms can demand a significantly higher portion of profits in the partnership than low‐productivity domestic firms.

THE FIRST INTERNATIONAL MERGER WAVE: DOES ACQUIRING FIRM WEALTH EFFECT PERSIST?

ABSTRACT The immediate acquiring firm announcement wealth effect throughout the first international takeover wave have been unprecedented and encouraging. However, little attention has been paid to their shareholder values in the long run. It is not unreasonable to suspect that the prospect in the long haul might not be as promising in light of the evidence presented in most long-term post-merger domestic M&A research as well as the claim of global diversification discount in a number of the international M&A studies. The results shown in the present research have been consistent with the cross-border diversification discount in the long run regardless of the measuring models implemented. The somewhat more surprising aspect is the sheer volumes of the discounts due to an apparent mismatch between the investors' initial over optimism and the acquirers' seeming inability of substantiating their perceived global diversification benefits. Furthermore, the conventional International Business OLI paradigm appears to explain the immediate acquiring firm wealth effect reasonably well, albeit providing less than full explanation on the diversification discount in the short and relatively long haul. In general, the global diversification discount starts to show up within three months of the initial cross-border M&A announcements, or six months if measured by a modified methodology. That is, the unprecedented acquiring firm value gain during the first international merger wave does not last long. To escape from such long-term global diversification discount and avoid the winners' curse, it would not be ill-advised for the acquirers to efficiently implement their post-announcement cross-border acquisition strategies in order to keep investors' adverse sentiment in check, and the OLI framework seems to provide a blueprint in principle for their success. Keywords Globalization; Mergers and Acquisitions; M&A; Announcement Wealth Effect; Global Diversification; Cross-Border Diversification; Diversification Discount; International Merger Wave

Mergers Along the Global Supply Chain: Information Technologies and Routine Tasks

AbstractThis paper empirically analyses how the adoption of Information Technologies (IT) has changed the organization of global supply chains. We focus on international mergers, which are a growing and important component of foreign direct investment. We use data on North–South mergers and acquisitions (M&amp;As). We show that the effect of IT adoption on the number of vertical M&amp;As is decreasing with the routine intensity of the industry. Our interpretation is that the IT revolution enabled new monitoring mechanisms. This allowed Northern headquarters to better monitor suppliers, especially those in less routine‐intensive industries –which were harder to monitor before.

Culture or Culture of Participation: A Success Factor by International Mergers and Acquisitions?

Diverse studies try to identify the influencing factors of success and failure for international Mergers and Acquisitions (M&amp;A). In this context, especially the role of participation and culture is being discussed controversially. The following article tries to shed some light on the debate, based on a quantitative research conducted in Bulgaria and Romania. In both countries organizational members were surveyed who were involved in an international M&amp;A-process initiated by a German based multinational company. The results show that participation is understood and valued differently in both countries.

Citizen Fox: The Global Antitrust Vision of Eleanor Fox

This chapter will examine the growth of Professor Eleanor Fox’s global and cosmopolitan vision for the future of competition policy. Over her illustrious career, Professor Fox’s scholarship traces an arc that began with the battle for the soul of U.S. antitrust law as the Chicago School’s influence began to dominate the discourse, enforcement policy, and eventually the case law. At the same time, Professor Fox also participated in the vigorous debate over the extraterritorial application of U.S. law to international cartels, monopolies, and mergers. Perhaps as a result of the changes in U.S. antitrust law, Professor Fox became a prominent voice in analyzing EU competition law and explaining that system to U.S. and international audiences as the influence of the U.S. as the antitrust hegemon began to wane. EU competition law was a natural focus for her scholarship, given its more complete vision of competition law in numerous important ways that fascinated Professor Fox. In more recent times, Professor Fox has also focused on the proper level of governance for competition policy in a globalized economy. She has focused on issues of gaps, legitimacy, and sufficiency to argue that global problems deserve, and require, global solutions. Depending on the specific issue, she has argued for the use of true international instruments and institutions ranging from international codes, WTO rules for competition policy, cooperation, harmonization, technical assistance, world restatements, as well as other hard law and soft law solutions, to solve the familiar problems of national competition law being used to regulate global markets. What most distinguishes Professor Fox from most other scholars in the field is her cosmopolitanism, a willingness to look at competition issues through the lens of global welfare not tied to individual citizenship. While often controversial, this perspective has allowed Professor Fox to find creative solutions for historically intractable problems and maintain an unwavering moral compass in addressing competition policy as a means to address poverty, democracy, and economic justice for the have nots in the global economy. We salute these accomplishments and conclude by speculating on the future and the promise as well as the obstacles for the implementation of Professor Fox’s global vision.

Consequences of Brexit for competition law and policy

If Brexit involves leaving the EEA, UK competition law will stand but come under strain as efficiencies of integrated policy are lost. For example, dual UK/EU scrutiny of international mergers will be needed. Scope for UK and EU competition law to diverge would open up, but that has costs as well as possible benefits. Merger policy should retain the competition foundations it now has, and not go back towards the politics of the ‘public interest’.