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U.S. takeovers in foreign markets: Do they impact emerging and developed markets differently?

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  • Burns, Natasha
  • Liebenberg, Ivonne

Abstract

We investigate the effect that U.S. acquisitions of targets in emerging and developed countries have on the targets' rivals by measuring their stock price reaction to the acquisition announcement. On average, emerging market rivals react positively to these acquisitions while the reaction in developed markets is insignificant. In developed markets, the main factors explaining the reaction of rival firms are individual rival characteristics such as rival size, efficiency, growth opportunities, and leverage. In contrast, in emerging markets, country, industry, and acquisition characteristics such as economic development, shareholder protection, and the target's public status, industry, and percent acquired, play a more important role.

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  • Burns, Natasha & Liebenberg, Ivonne, 2011. "U.S. takeovers in foreign markets: Do they impact emerging and developed markets differently?," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1028-1046, September.
    • Handle: RePEc:eee:corfin:v:17:y:2011:i:4:p:1028-1046
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    2. Bradley, Daniel & Yuan, Xiaojing, 2013. "Information spillovers around seasoned equity offerings," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 106-118.
    3. Georgieva, Dobrina & Jandik, Tomas & Lee, Wayne Y., 2012. "The impact of laws, regulations, and culture on cross-border joint ventures," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 774-795.

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