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The impact of country risk ratings on U.S. firms in large cross-border acquisitions

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  • Kiymaz, Halil
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    Abstract

    This study investigates the impact of country risk ratings on the wealth gains to large U.S. bidders involved in cross-border acquisitions. The findings indicate that U.S. bidders experience positive wealth gains during the merger announcements, though this is concentrated in transactions involving European targets. There are also differences in wealth gains to bidders with respect to industry classification and location of foreign targets. The country risk factors including economic, political, and financial risk ratings all play a significant role in explaining the wealth gains to bidders. Furthermore, the wealth gains are higher for the firms with acquisitions in developed countries and are significantly related to GNP growth rate.

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    Bibliographic Info

    Article provided by Elsevier in its journal Global Finance Journal.

    Volume (Year): 20 (2009)
    Issue (Month): 3 ()
    Pages: 235-247

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    Handle: RePEc:eee:glofin:v:20:y:2009:i:3:p:235-247

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    Web page: http://www.elsevier.com/locate/inca/620162

    Related research

    Keywords: International mergers and acquisitions Country risk Wealth effects;

    References

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    Cited by:
    1. Liu, Tengdong & Hammoudeh, Shawkat & Thompson, Mark A., 2013. "A momentum threshold model of stock prices and country risk ratings: Evidence from BRICS countries," Journal of International Financial Markets, Institutions and Money, Elsevier, Elsevier, vol. 27(C), pages 99-112.
    2. Uddin, Moshfique & Boateng, Agyenim, 2011. "Explaining the trends in the UK cross-border mergers & acquisitions: An analysis of macro-economic factors," International Business Review, Elsevier, Elsevier, vol. 20(5), pages 547-556, October.

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