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Cross-border merger waves

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  • Xu, Emma Qianying

Abstract

We examine the valuation effects of cross-border merger and acquisition (M&A) waves. Like domestic M&As, cross-border M&As cluster by industry and time. Cross-border M&A waves create value overall: acquirer announcement returns, combined acquirer and target announcement returns, and post-merger operating performance within waves are significantly higher than those outside of waves. Unlike domestic M&A waves, deals undertaken later in waves outperform those earlier in waves. The late entrants' outperformance is stronger when target countries differ from acquirer countries in terms of culture, financial development, and legal system. Overall, the results suggest that cross-border acquisitions promote efficient redeployment of corporate assets.

Suggested Citation

  • Xu, Emma Qianying, 2017. "Cross-border merger waves," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 207-231.
    • Handle: RePEc:eee:corfin:v:46:y:2017:i:c:p:207-231
    DOI: 10.1016/j.jcorpfin.2017.07.004
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    2. Wang, Hao & Han, Yonghui & Fidrmuc, Jan & Wei, Dongming, 2021. "Confucius Institute, Belt and Road Initiative, and Internationalization," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 237-256.
    3. Hossain, Mohammed Sawkat, 2021. "Merger & Acquisitions (M&As) as an important strategic vehicle in business: Thematic areas, research avenues & possible suggestions," Journal of Economics and Business, Elsevier, vol. 116(C).
    4. Tunyi, Abongeh A., 2021. "Revisiting acquirer returns: Evidence from unanticipated deals," Journal of Corporate Finance, Elsevier, vol. 66(C).
    5. Fuad, Mohammad & Gaur, Ajai S., 2019. "Merger waves, entry-timing, and cross-border acquisition completion: A frictional lens perspective," Journal of World Business, Elsevier, vol. 54(2), pages 107-118.
    6. RAHMAN, Md. Atiqur & USHER, Lauren, 2022. "A Critical Review Of Neoclassical And Behavioural Theories Of Merger Waves," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 26(1), pages 6-22, March.
    7. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 650-699.
    8. Flor, Christian Riis & Moritzen, Mark Raun, 2020. "Entering a new market: Market profitability and first-mover advantages," Journal of Corporate Finance, Elsevier, vol. 62(C).
    9. Kyeong Hun Lee, 2018. "Cross‐border mergers and acquisitions amid political uncertainty: A bargaining perspective," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 2992-3005, November.
    10. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Other publications TiSEM 9baa3ffc-67cb-4647-9da5-a, Tilburg University, School of Economics and Management.
    11. Ahsan, Faisal Mohammad & Fuad, Mohammad & Sinha, Ashutosh Kumar, 2021. "Seeking strategic assets within cross-border acquisition waves: a study of Indian firms," Journal of International Management, Elsevier, vol. 27(4).
    12. Peter Zámborský & Zheng Joseph Yan & Erwann Sbaï & Matthew Larsen, 2021. "Cross-Border M&A Motives and Home Country Institutions: Role of Regulatory Quality and Dynamics in the Asia-Pacific Region," JRFM, MDPI, vol. 14(10), pages 1-24, October.
    13. David Godsell & Ugur Lel & Darius Miller, 2023. "U.S. national security and de-globalization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(8), pages 1471-1494, October.
    14. Zhang, Chi & Kandilov, Ivan T. & Walker, Mark D., 2021. "Direct flights and cross-border mergers & acquisitions," Journal of Corporate Finance, Elsevier, vol. 70(C).
    15. Smith, Garrett C. & Coy, Jeffrey M. & Spieler, Andrew C., 2019. "Cross-border transactions, mergers and the inconsistency of international reference points," Journal of Behavioral and Experimental Finance, Elsevier, vol. 22(C), pages 14-21.

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    More about this item

    Keywords

    Cross-border mergers and acquisitions; Merger waves; Shareholder value;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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