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Cross-border Mergers and Acquisitions in different legal environments

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  • Feito-Ruiz, Isabel
  • Menéndez-Requejo, Susana
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    Abstract

    The aim of this paper is to analyze the influence of the legal and institutional environment on bidder firm returns around the announcement date of cross-border Mergers and Acquisitions (M&As). The database includes 469 M&As of European (221 cross-border and 248 domestic) listed firms, with target firms being worldwide public or private firms (40 countries), over the 2002–2006 period. Shareholders of acquiring firms place greater value on cross-border M&A announcements than on domestic ones. The stronger (weaker) the legal and institutional environment of the acquirer firm country in comparison with that of the target firm country, the more positive (negative) the effect on acquiring-firm shareholders' valuation of M&As.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 31 (2011)
    Issue (Month): 3 (September)
    Pages: 169-187

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    Handle: RePEc:eee:irlaec:v:31:y:2011:i:3:p:169-187

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

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    Keywords: Mergers and Acquisitions (M&As) Cross-border deals Acquiring-firm abnormal return Legal environment Investor protection;

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    Cited by:
    1. Gregory, Alan & O'Donohoe, Sheila, 2014. "Do cross border and domestic acquisitions differ? Evidence from the acquisition of UK targets," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 61-69.
    2. Jory, Surendranath R. & Madura, Jeff & Ngo, Thanh N., 2012. "Deal structure decision in the global market for divested assets," International Review of Financial Analysis, Elsevier, vol. 24(C), pages 104-116.
    3. Humphery-Jenner, Mark, 2012. "The impact of the EU takeover directive on takeover performance and empire building," Journal of Corporate Finance, Elsevier, vol. 18(2), pages 254-272.

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