Do Cross-Border Acquisitions Create More Shareholder Value than Domestic Deals for Firms in a Matured Economy? The Japanese Case

Inoue, Kotaro; Ings, R. M. J.

doi:10.2139/ssrn.1933124

Cited by 1 publication

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“…Some researchers have noted that the chances of a positive impact on performance increases if the firms involved are in related industries (Carow, Heron, & Saxton, 2004;Morck & Yeung, 1991), while others have reached the opposite conclusion (Aybar & Ficici, 2009;Lubatkin, 1987). Moreover, some studies indicate that returns to the acquiring company develop more favorably in cross-border M&As than in domestic ones (Inoue & Ings, 2012;Markides & Ittner, 1994), whereas others do not support that finding (Cakici, Hessel, & Tandon, 1996).…”

Section: What Do We Know About Manda Performance?mentioning

confidence: 98%

“…CBAs brought about higher productivity gains to target firms located in geographies other than the Euro area. In a Japanese context, Inoue and Ings (2012) found that CBAs generated higher returns for Japanese acquirers than did the domestic deals and that targets located in emerging markets created more value than those located in the G7 countries.…”

Section: Are Domestic and Cross-border Acquisitions Alike?mentioning

confidence: 99%

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Probing the effects of cultural and psychic distance on M&A performance: the case of multilatinas' cross-border acquisitions

Dakessian¹,

Paulo²

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Cross-border acquisitions (CBAs) have extensively been used by Multilatinas as a preferred entry mode in foreign markets, quickly providing access to resources, competencies and local intelligence without the burden of starting up a greenfield investment and bearing its associated risk to face the liability of foreignness. Using fixed-effects, generalized least square (FEGLS) regressions applied on a panel data sample of 602 CBA deals announced during the 1989-2011 period by 182 Multilatinas competing in 74 industries and headquartered in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela, the impact of cultural and psychic distances (as perceived by investors) on the performance of these CBA deals (measured by acquirers' shareholders' short term announcement returns) was evaluated. Key emerging conclusions are that: a) the national cultural distance composite index, based on Hofstede's four dimensions seems to better predict investors' reaction to CBA announcements in comparison with the other "psychic" distance concepts, such as the administrative and geographical distances between home and host countries; b) investors' perceptions regarding the cultural dissimilarities between these countries are factored in their response as an anticipation of the expected difficulties that acquiring firms' will have during the post-merger integration process, as predicted by the several theoretical streams that focus on the role of culture in M&A; c) due to the positive and significant moderating effect of the uncertainty avoidance dimension, investors seem also to perceive that acquirers from home countries characterized by high uncertainty avoidance scores will be able to better handle the challenges that they will face in the post-merger integration stage, to the extent that these firms, as recognized in the cross-cultural research literature, have been associated with a preference for organizational rules and procedures that increase the chances of a successful completion of the merger or acquisition deal; d) although its role is recognized in the crosscultural literature, power distance levels have no significant moderating effect on the cultural distance-M&A performance relationship. The models are robust to varying lengths of event windows and to alternative measurements of cultural distance, such as those based on the framework developed by the GLOBE project (House, Hanges, Javidan, Dorfman, & Gupta, 2004) and on the country cultural cluster maps proposed by Ronen and Shenkar (2013). Limitations of this study are pointed out and future research directions are suggested in order to advance our knowledge and understanding of the antecedents of the performance of the cross-border acquisitions made by Multilatinas.

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