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The Geography of Block Acquisitions

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  • JUN-KOO KANG
  • JIN-MO KIM
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    Abstract

    Using a large sample of partial block acquisitions, we examine the importance of geographic proximity in corporate governance and target returns. We find that block acquirers have a strong preference for geographically proximate targets and acquirers that purchase shares in such targets are more likely to engage in post-acquisition target governance activities than are remote block acquirers. Moreover, the targets of these acquirers realize higher announcement returns and better post-acquisition operating performance than do targets of other types of acquirers, particularly when they face greater information asymmetries. Copyright (c) 2008 The American Finance Association.

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    Bibliographic Info

    Article provided by American Finance Association in its journal The Journal of Finance.

    Volume (Year): 63 (2008)
    Issue (Month): 6 (December)
    Pages: 2817-2858

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    Handle: RePEc:bla:jfinan:v:63:y:2008:i:6:p:2817-2858

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    Cited by:
    1. Victor DRAGOTA & Carmen LIPARA & Radu CIOBANU, 2013. "Agency Problems and Synergistic Effects in Romania: The Determinants of the Control Premium," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 63(2), pages 197-219, May.
    2. Michalski, Tomasz & Ors, Evren, 2012. "(Interstate) Banking and (interstate) trade: Does real integration follow financial integration?," Journal of Financial Economics, Elsevier, vol. 104(1), pages 89-117.
    3. Baik, Bok & Kang, Jun-Koo & Kim, Jin-Mo, 2010. "Local institutional investors, information asymmetries, and equity returns," Journal of Financial Economics, Elsevier, vol. 97(1), pages 81-106, July.
    4. Liao, Rose C., 2014. "What drives corporate minority acquisitions around the world? The case for financial constraints," Journal of Corporate Finance, Elsevier, vol. 26(C), pages 78-95.
    5. Knyazeva, Anzhela & Knyazeva, Diana & Stiglitz, Joseph E., 2013. "Ownership change, institutional development and performance," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2605-2627.
    6. Vithessonthi, Chaiporn & Techarongrojwong, Yaowaluk, 2013. "Do monetary policy announcements affect stock prices in emerging market countries? The case of Thailand," Journal of Multinational Financial Management, Elsevier, vol. 23(5), pages 446-469.
    7. John, Kose & Knyazeva, Anzhela & Knyazeva, Diana, 2011. "Does geography matter? Firm location and corporate payout policy," Journal of Financial Economics, Elsevier, vol. 101(3), pages 533-551, September.
    8. Ayers, Benjamin C. & Ramalingegowda, Santhosh & Eric Yeung, P., 2011. "Hometown advantage: The effects of monitoring institution location on financial reporting discretion," Journal of Accounting and Economics, Elsevier, vol. 52(1), pages 41-61, June.
    9. Dai, Na & Jo, Hoje & Kassicieh, Sul, 2012. "Cross-border venture capital investments in Asia: Selection and exit performance," Journal of Business Venturing, Elsevier, vol. 27(6), pages 666-684.
    10. He, Wen & Li, Donghui & Shen, Jianfeng & Zhang, Bohui, 2013. "Large foreign ownership and stock price informativeness around the world," Journal of International Money and Finance, Elsevier, vol. 36(C), pages 211-230.
    11. Sergey Stepanov, 2012. "Takeovers under Asymmetric Information: Block Trades and Tender Offers in Equilibrium," Working Papers w0185, Center for Economic and Financial Research (CEFIR).
    12. Kedia, Simi & Zhou, Xing, 2011. "Local market makers, liquidity and market quality," Journal of Financial Markets, Elsevier, vol. 14(4), pages 540-567, November.
    13. Antonio Acconcia & Alfredo Del Monte & Luca Pennacchio, 2011. "Underpricing and Firm’s Distance from Financial Centre: Evidence from three European Countries," CSEF Working Papers 295, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    14. Umber, Marc P. & Grote, Michael H. & Frey, Rainer, 2014. "Same as it ever was? Europe's national borders and the market for corporate control," Journal of International Money and Finance, Elsevier, vol. 40(C), pages 109-127.
    15. García, Diego & Norli, Øyvind, 2012. "Geographic dispersion and stock returns," Journal of Financial Economics, Elsevier, vol. 106(3), pages 547-565.
    16. Masulis, Ronald W. & Wang, Cong & Xie, Fei, 2012. "Globalizing the boardroom—The effects of foreign directors on corporate governance and firm performance," Journal of Accounting and Economics, Elsevier, vol. 53(3), pages 527-554.
    17. Owen, Sian & Yawson, Alfred, 2013. "Information asymmetry and international strategic alliances," Journal of Banking & Finance, Elsevier, vol. 37(10), pages 3890-3903.
    18. Saeyoung Chang & Eric Mais & Michael Sullivan, 2013. "The effect of target managerial ownership on the choice of acquisition financing and CEO job retention," Review of Quantitative Finance and Accounting, Springer, vol. 40(3), pages 423-442, April.

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