Multilatinas and value creation from cross-border acquisitions:: an event study approach

Abstract

The central proposition of this paper is to assess the performance of cross-border acquisitions made by Multilatinas. Applying the event study method to a sample of 607 announcements of acquisitions during the period 1989-2011 by 182 Multilatinas from Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela, we conclude that: (a) on average, these announcements have a neutral impact on the short-term returns to acquiring companies' shareholders; (b) cross-sectional analysis reveals that relative size of the deals have a negative and significant effect on investors' reactions and; (c) unlike the institutional distance between home and host countries, cultural distance matters, since it has a negative and significant effect on the perceptions that investors have regarding the expected economic impact of acquirers' cross-border merger and acquisition (M&A) decisions. Inasmuch as the market rationality assumption that underlies the event study method has been questioned, future research lines are proposed in order to search for alternative long-term performance constructs concerning M&A processes in general that can: (a) shed light on the reality of value creation (and destruction) from cross-border acquisitions made by Multilatinas; and (b) contribute to strategy, international business and M&A theories and practice.

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

“…These findings contrast with conclusions of an extensive empirical research arguing that cultural distance is likely to lead to cultural "collisions", particularly during the postacquisition period (Haspeslagh & Jemison, 1991;Larsson & Lubatkin, 2001). Using a sample of 122 large cross-border acquisitions undertaken by American firms between 1978 and 1990, Datta and Puia (1995) also found cultural differences to be negatively associated with the performance of the M&A activities carried out by these firms, a result consistent with Dakessian and Feldmann's (2013) study, considering a sample of acquirers located in Latin America.…”

“…Apart from extensions of Kogut and Singh's work (Slangen & Hennart, 2008), this index has been used in a variety of other theoretical inquiries such as the impact of national culture differences on the longevity of foreign entries (Barkema, Bell, & Pennings, 1996), on motivations behind joint venture dissolutions (Park & Ungson, 1997), on preferences for licensing over foreign direct investments (Shane, 1992), whether or not culturally related international diversification have positive effect on firm performance (Gomez-Mejia & Palich, 1997), and in the massive academic productionof which this thesis is another exampleinvestigating the effects of national cultural distance on M&A performance, either based upon the Hofstede's cultural dimensions (Dakessian & Feldmann, 2013;Morosini, Shane, & Singh, 1998;Slangen, 2006;Weber et al, 1996) or on the cultural dimensions measured by the GLOBE project 23 using an adapted version of equation 1, such as in the studies of Reus and Lamont (2009), Vaara, Sarala, Stahl, and Björkman (2012), and Dikova…”

“…In this case, γ would be a (11x1) unit vector. Dakessian and Feldmann (2013) followed this procedure to test the null hypothesis that the average cumulative abnormal return generated by the announcements made by 182…”

Influências da experiência internacional e da diversificação de negócios no grau de internacionalização das Multinacionais Brasileiras

“…Destaca-se as observações de Melo e Mussengue (2011) no qual apontam que as operações no mercado internacional na América Latina decorre de fatores relacionados com: o processo de desregulamentação e privatização; aspectos culturais e o tamanho de mercados ainda pouco explorados. Não se desconsidera ainda, o fato de que uma série de Multilatinas -multinacionais de países em desenvolvimento -possuam características específicas de expansão internacional, utilizando muitas vezes, estratégias agressivas voltadas para a aquisição de empresas no exterior (Dakessian & Feldmann, 2013).…”

Avaliação do papel das agências de promoção de exportação e investimento nos fluxos de negócios entre países

“…as preferências para o licenciamento de investimentos diretos no exterior (Shane, 1992), o efeito da distância cultural sobre o desempenho da empresa (Gomez-Mejia & Palich, 1997), e na investigação dos efeitos da distância cultural sobre o desempenho de fusões e aquisições (Dakessian & Feldmann, 2013;Dakessian, 2014;Morosini, Shane, & Singh, 1998;Slangen, 2006;Weber, Shenkar, & Raveh, 1996). (Magnusson, Wilson, Zdravkovic, Zhou, & Westjohn, 2008;Uhlenbruck, 2004).…”