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PurposeUnderstanding the mechanism through which digital economy is significantly impacting all dimensions of global economy has become a rising priority in recent years. The purpose of this paper is to investigate the critical role of digital readiness of economies around the world on the performance of international M&As as one of the major corporate strategies for firms' global expansion. We also study circumstances under which digital readiness of an economy matters to international M&As.Design/methodology/approachThe authors examined how digital readiness superiority (or inferiority) of the United States in comparison with host countries impact capital market reaction to international M&As announced by US public companies. To do this study, analysis was run on a sample of 1,393 IMAs by publicly traded US firms during the 2010–2016 period.FindingsThe study reveals that those public US companies that target companies in countries, in which the US has superior digital readiness to them, show better performance in terms of investors' reaction (capital market reaction) to the announcement of international M&As. In fact, markets will look at the superiority of US digital readiness to target country as an opportunity for transferring digital capabilities. Moreover, these patterns are pronounced in those M&A deals in which the acquiring company is from high-tech industry. However, interestingly when US companies already have a profitable growth track record or when acquirer and target are in the same industry, the market reacts negatively to this digital superiority.Originality/valueOverall, this study contributes to a better understanding of the mechanisms through which digitalization of economies impact the performance of multinational enterprises. It adds to the information management literature on corporate global strategy and is one of the first to examine the role of digital readiness on international M&As performance.

The momentum anomaly is widely attributed to investor cognitive biases, but the trigger of cognitive biases is largely unexplored. In this study, inspired by psychology studies linking cognitive biases to the noisiness of information, we examine whether momentum returns are associated with high stock price synchronicity, a manifestation of noisy firm-specific information. Our results demonstrate that momentum is more pronounced in the presence of high stock price synchronicity. This finding is robust to other explanations and firm characteristics. We also find that stock price synchronicity boosts the profitability of momentum by amplifying investor underreaction to new information.

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This paper investigates whether and how the development level of a country's digital economy affects stock price synchronicity. The results indicate that countries with high levels of digital economy development exhibit low stock price synchronicity. Additionally, by decomposing stock price synchronicity into systematic and firm-specific stock return variations, we find that systematic (firm-specific) variations of stock returns decrease (increase) with the level of a country's digitalization. These findings shed light on the future trend of stock price synchronicity in financial markets around the world and support the information-based interpretation of stock price synchronicity.