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Target Company Cross-border Effects in Acquisitions into the UK

Author

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  • Jo Danbolt

Abstract

"We analyse the abnormal returns to target shareholders in cross-border and domestic acquisitions of UK companies. The cross-border effect during the bid month is small (0.84%), although cross-border targets gain significantly more than domestic targets during the months surrounding the bid. We find no evidence for the level of abnormal returns in cross-border acquisitions to be associated with market access or exchange rate effects, and only limited support for an international diversification effect. However, the cross-border effect appears to be associated with significant payment effects, and there is no significant residual cross-border effect once various bid characteristics are controlled for." Copyright Blackwell Publishers Ltd, 2004.

Suggested Citation

  • Jo Danbolt, 2004. "Target Company Cross-border Effects in Acquisitions into the UK," European Financial Management, European Financial Management Association, vol. 10(1), pages 83-108.
  • Handle: RePEc:bla:eufman:v:10:y:2004:i:1:p:83-108
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    Citations

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    Cited by:

    1. Mateev, Miroslav & Andonov, Kristiyan, 2016. "Do cross-border and domestic bidding firms perform differently? New evidence from continental Europe and the UK," Research in International Business and Finance, Elsevier, vol. 37(C), pages 327-349.
    2. Moshfique Uddin & Agyenim Boateng, 2009. "An analysis of short-run performance of cross-border mergers and acquisitions: Evidence from the UK acquiring firms," Review of Accounting and Finance, Emerald Group Publishing, vol. 8(4), pages 431-453, October.
    3. Martynova, M. & Renneboog, L.D.R., 2006. "Mergers and Acquisitions in Europe," Discussion Paper 2006-003, Tilburg University, Tilburg Law and Economic Center.
    4. Martynova, M. & Renneboog, L.D.R., 2005. "Takeover Waves : Triggers, Performance and Motives," Discussion Paper 2005-029, Tilburg University, Tilburg Law and Economic Center.
    5. Sharma, Abhijit & Raat, Erwin, 2016. "Acquiring control in emerging markets: Foreign acquisitions in Eastern Europe and the effect on shareholder wealth," Research in International Business and Finance, Elsevier, vol. 37(C), pages 153-169.
    6. Kohli, Reena & Mann, Bikram Jit Singh, 2012. "Analyzing determinants of value creation in domestic and cross border acquisitions in India," International Business Review, Elsevier, vol. 21(6), pages 998-1016.
    7. Martynova, M., 2006. "The market for corporate control and corporate governance regulation in Europe," Other publications TiSEM 8651e281-4914-41f2-ac14-1, Tilburg University, School of Economics and Management.
    8. Martynova, Marina & Renneboog, Luc, 2008. "A century of corporate takeovers: What have we learned and where do we stand?," Journal of Banking & Finance, Elsevier, vol. 32(10), pages 2148-2177, October.
    9. 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.
    10. Kohli, Reena & Mann, Bikram Jit Singh, 2013. "Analyzing the likelihood and the impact of earnout offers on acquiring company wealth gains in India," Emerging Markets Review, Elsevier, vol. 16(C), pages 203-222.
    11. Du, Min & Boateng, Agyenim, 2015. "State ownership, institutional effects and value creation in cross-border mergers & acquisitions by Chinese firms," International Business Review, Elsevier, vol. 24(3), pages 430-442.
    12. Anderson, Hamish D. & Marshall, Ben R. & Wales, Ryan, 2009. "What is the relationship between investor protection legislation and target takeover returns? Evidence from Europe," Journal of Multinational Financial Management, Elsevier, vol. 19(4), pages 291-305, October.

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