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The long-run performance of cross-border acquirers: An analysis of synergy sources

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  • Hsu, Junming
  • Yang, Tung-Hsiao
  • Tsai, Yi-Chi

Abstract

This study examines the long-run stock performance of US firms conducting cross-border mergers and acquisitions and explores possible synergy sources by investigating three sets of factors: country differences, merger characteristics, and acquirers' operational variables. The results show that US cross-border acquirers underperform in the long run, a situation that does not significantly change according to country differences. Acquisitions of horizontal and private targets outperform those of non-horizontal and public targets, respectively, but underperform their non-acquiring matching firms. By contrast, acquirers with post-merger decreases in costs of goods sold (CGS) outperform their acquiring peers and non-acquiring matching sample. These results suggest that cross-border acquirers need to select targets that can drive down CGS and be cautious of merging non-horizontal and public firms, in order to create synergy gains and avoid value destruction.

Suggested Citation

  • Hsu, Junming & Yang, Tung-Hsiao & Tsai, Yi-Chi, 2021. "The long-run performance of cross-border acquirers: An analysis of synergy sources," Journal of Multinational Financial Management, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:mulfin:v:60:y:2021:i:c:s1042444x21000189
    DOI: 10.1016/j.mulfin.2021.100694
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    More about this item

    Keywords

    Cross-border mergers and acquisitions; Long-run performance; Synergy sources; Private targets;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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