Determinants of the share of equity sought in cross-border acquisitions

Chari, Murali D.R.; Chang, Kiyoung

doi:10.1057/jibs.2008.103

Cited by 219 publications

(366 citation statements)

References 56 publications

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“…The literature in international business and strategy suggests that market knowledge may trigger vertical as well as horizontal expansion, often through acquisitions of suppliers and customers integrated within the value chain, as well as acquisition of competitors (Chari & Chang, 2009, Haleblian, Devers, McNamara, Carpenter, & Davison, 2009). Lack of market knowledge is likely to hamper the firm's prospects to undertake acquisition as the firm will either not know the potential target firms or the value realizable by undertaking acquisition.…”

Section: Experiential Market Knowledgementioning

confidence: 99%

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

Buckley

Munjal

Enderwick

et al. 2016

Journal of World Business

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Section: Experiential Market Knowledgementioning

confidence: 99%

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

Buckley

Munjal

Enderwick

et al. 2016

Journal of World Business

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“…In this spirit, Chari and Chang (2009) demonstrate that cultural distance between the home and host country has a positive effect on incentives for local managers. For China, Lee, Chen, and Kao (1998) show that when the local partner in the EJV is connected to the local government, the level of its equity ownership is higher.…”

Section: Introductionmentioning

confidence: 89%

Dual and Common Agency Issues in International Joint Ventures: Evidence From China

Roelfsema

Zhang

2013

Singapore Econ. Rev.

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With the help of a theoretical model we analyze the relation between equity sharing in an international joint venture (EJV) and local public goods provision in a setting where the local government faces a commitment problem to provide public services ex post to the set-up of the firm. We show that to overcome such a dual agency problem, the multinational leaves more local rents to the local partner than in the first-best, so as to provide stronger incentives for the government to supply public goods. Applying dynamic panel data estimation, we test the trade-off between local public goods and ownership shares across 31 Chinese provinces to find support for our mechanism

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“…This would happen if bidding firm puts more emphasis on valuation process of a target firm through a planned approach, which is important in international deals (Mukherji, Mukherji, Dibrell, & Francis, 2013). In addition, premium paid to target shareholders also influenced by external factors such as number of competitive bids, nature of the business, controlling power of the industry, stock market conditions, and institutional rules of the host country (Akerlof, 1970;Chari & Chang, 2009;Maksimovic, Phillips, & Yang, 2013), and social and behavioral factors (Malhotra & Zhu, 2013). While supporting aforementioned streaks, we would wish to comment that fixing high premium or less premium also depend on acquirer skills, expertise and prior acquisition experience and M&A advisors involving in the bargaining process.…”

Section: (D) Tax and Taxation Issuesmentioning

confidence: 99%

Determinants of Cross-Border Mergers and Acquisitions: A Comprehensive Review and Future Direction

Reddy

2015

SSRN Journal

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The purpose of this paper is to review and summarize earlier studies analyzing the determinants of cross-border mergers and acquisitions (M&As). We primarily describe the motives of cross-border acquisitions and present the market performance for corporate control transactions over the period 1994-2013. Then, we illustrate the factors affecting cross-border investments and acquisitions in various taxonomies, namely deal-specific factors, firm-and industry-specific attributes, organizational learning and prioracquisition experience, and country-specific factors. We draw special attention to the country-specific taxonomy for various reasons include economic and financial markets environment, institutional and regulatory framework, political situation (including corruption), tax system, accounting and valuation matters, geographical factors and cultural issues. We also provide a synopsis of earlier studies addressing the diversification motive in M&A decision. We thus propose that a host-country's institutional laws and regulatory system, accounting and tax provisions, economic performance, financial markets development, investor protection, geographical, political and cultural factors distinctly affect cross-border acquisition's completion. Lastly, we outline contemporary issues in M&A research, and suggest promising areas for future exploration. JEL Classification: G34

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Determinants of the share of equity sought in cross-border acquisitions

Cited by 219 publications

References 56 publications

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

Dual and Common Agency Issues in International Joint Ventures: Evidence From China

Determinants of Cross-Border Mergers and Acquisitions: A Comprehensive Review and Future Direction

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