M&A performance in emerging markets: do they behave in unison or otherwise?

Abstract

PurposeThe study aims to evaluate and compare the mergers and acquisitions (M&As) performance utilising a sample of deals originating from Brazil, Russia, India, China and South Africa (BRICS). In addition to nation-wise performance analysis, a further sub-sample analysis is conducted based on the target location (domestic and cross-border), development status (developed and emerging) and the acquired ownership stakes (majority and minority).Design/methodology/approachThe final sample of the study includes 7,105 deals announced between 2000 and 2019. M&A performance is proxied by the abnormal returns earned over the select event windows. Multiple parametric and non-parametric tests are employed for testing the robustness.FindingsThe results indicate significant performance differences across BRICS markets, with the highest and lowest abnormal returns reported for Chinese and Russian acquirers, respectively. The disaggregated analysis also affirms the performance differences for the select sub-samples.Research limitations/implicationsThe study highlights the need for acknowledging and expounding the differences in M&As across emerging markets. Further, the results of the study provide a possible explanation of the disagreement over the M&A performance results reported in the previous literature.Practical implicationsAcknowledging and understanding the potential performance differences based on location, ownership strategies and development status can aid executives in sharpening decision-making and also help general investors.Originality/valueThe study contributes by examining a comprehensive sample of deals across five major emerging economies, as against the majority of previous studies which have their results based on either single nation samples or have utilised only a sub-sample of domestic or foreign acquisitions.

Interplay of cross-country distance with cross-border M&A performance: an institutional perspective

“…This performance puzzle calls for a comprehensive examination. While the previous studies have majorly remained limited to India and China, the present study especially contributes to the scarce research evidence in the context of South Africa, Brazil and Russia (Ermolaeva, 2019; Kukreja et al , 2022; Luiz and Barnard, 2022). Secondly, although the concept of cross-country distance is well recognised in the literature, the relative significance and impact of its various dimensions need to be yet understood.…”