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Is the grass on the other side greener? Testing the cross-border effect for U.S. acquirers

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  • Yun Meng

    (University of Wisconsin-Green Bay)

  • Ninon K. Sutton

    (University of South Florida)

Abstract

Why do U.S. acquirers fare worse when acquiring targets in foreign countries than when acquiring domestic targets? This paper investigates reasons for the so called “cross-border effect” by examining the influence of target public status and competitiveness of the takeover market in the target country. Our findings show that the listing status of the target drives the cross-border effect in two opposite directions: acquirers of private targets fare worse in cross-border takeovers, while acquirers of public targets experience significantly higher gains in acquisitions of foreign targets. The positive cross-border benefit for acquirers of public targets is more pronounced if the target is from a country with a less competitive takeover market.

Suggested Citation

  • Yun Meng & Ninon K. Sutton, 2017. "Is the grass on the other side greener? Testing the cross-border effect for U.S. acquirers," Review of Quantitative Finance and Accounting, Springer, vol. 48(4), pages 917-937, May.
    • Handle: RePEc:kap:rqfnac:v:48:y:2017:i:4:d:10.1007_s11156-016-0573-1
    DOI: 10.1007/s11156-016-0573-1
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    1. Jian Cao & Kimberly M. Ellis & Mingxiang Li, 2019. "Inside the board room: the influence of nationality and cultural diversity on cross-border merger and acquisition outcomes," Review of Quantitative Finance and Accounting, Springer, vol. 53(4), pages 1031-1068, November.
    2. Yasser Alhenawi & Martha L. Stilwell, 2019. "Toward a complete definition of relatedness in merger and acquisition transactions," Review of Quantitative Finance and Accounting, Springer, vol. 53(2), pages 351-396, August.
    3. Pandey, Vivek & Steigner, Tanja & Sutton, Ninon K., 2023. "The value of economic freedom in cross-border mergers," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 540-563.

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    More about this item

    Keywords

    Mergers; Acquisitions; Cross-border takeovers;
    All these keywords.

    JEL classification:

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

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