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U.S. takeovers in foreign markets: Do they impact emerging and developed markets differently?

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  • Burns, Natasha
  • Liebenberg, Ivonne
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    Abstract

    We investigate the effect that U.S. acquisitions of targets in emerging and developed countries have on the targets' rivals by measuring their stock price reaction to the acquisition announcement. On average, emerging market rivals react positively to these acquisitions while the reaction in developed markets is insignificant. In developed markets, the main factors explaining the reaction of rival firms are individual rival characteristics such as rival size, efficiency, growth opportunities, and leverage. In contrast, in emerging markets, country, industry, and acquisition characteristics such as economic development, shareholder protection, and the target's public status, industry, and percent acquired, play a more important role.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0929119911000551
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 17 (2011)
    Issue (Month): 4 (September)
    Pages: 1028-1046

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    Handle: RePEc:eee:corfin:v:17:y:2011:i:4:p:1028-1046

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    Web page: http://www.elsevier.com/locate/jcorpfin

    Related research

    Keywords: Cross-border merger and acquisitions Contagion effects Competitive effects Rivals Emerging markets;

    References

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    Cited by:
    1. Bradley, Daniel & Yuan, Xiaojing, 2013. "Information spillovers around seasoned equity offerings," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 106-118.

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