Cross-Border Acquisitions Targeting Emerging Market Firms - A Study of Acquirer Returns
Sammanfattning: In this study we use a sample of cross-border control acquisitions, performed by U.S. acquirers targeting emerging market and developed market firms, divided into two sub-periods represented by 1998-2002 and 2003-2007. We show that there exists a difference in acquirer returns, amounting to 198 basis points, favoring companies targeting emerging market firms during the first sub-period. We also show that no statistically significant evidence indicates that such a premium is present in the more recent time period. Additionally, we conclude that these results hold to the inclusion of several deal specific as well as acquirer specific characteristics. Furthermore, we find evidence suggesting that this difference in acquirer returns is shown to have been, to some extent, explained by dissimilarities in country specific factors between the regions. More specifically we show that the level of country governance as well as the extent of shareholder protection, in the target country, has a significantly negative correlation with acquirer returns. Our findings show no evidence to support a relationship between economic development in the target country and acquirer returns.
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