Determinants of target selection and acquirer returns: Evidence from cross-border acquisitions
AbstractWe examine cross-border acquisitions of private and public targets by U.S. firms by employing self selection models. We are particularly interested in the roles of country-level liquidity and transparency in cross-border acquisitions. Our results show that a typical acquisition deal of a private target is smaller in size, uses cash less frequently for payment, and involves more high-tech firms than that of a public target. Most importantly, we find that acquiring firms are more likely to buy private targets in lower-transparency countries, but the level of market liquidity in the target firm countries has little effect on the target selection. Furthermore, after accounting for the endogeneity bias associated with target selection, country liquidity is no longer a key determinant of acquirer returns in cross-border acquisitions. Our results are robust to alternative specifications of dependent variable and self selection models.
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Bibliographic InfoArticle provided by Elsevier in its journal International Review of Economics & Finance.
Volume (Year): 27 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/620165
Private targets; Public targets; Cross-border acquisitions; Liquidity; Transparency;
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
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