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Foreign acquisitions and firm performance: The moderating role of prior foreign experience

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  • Agyei-Boapeah, Henry

Abstract

This paper relies on a sample of 9419 acquisitions by 1443 UK firms during 1988 to 2014 to investigate the impact of foreign acquisitions on corporate performance. Moreover, the moderating role of firms' prior exposure to foreign markets on the foreign acquisition-performance link is explored. The paper finds that, on average, foreign acquisitions have a negative impact on corporate performance. However, the negative impact of foreign acquisitions disappears under two circumstances: (1) when domestic firms undertake foreign acquisitions; and (2) when highly experienced multinationals undertake foreign acquisitions. Collectively, the findings imply that the benefits (costs) associated with foreign acquisitions are greater (lower) for new entrants into foreign markets and for highly experienced multinationals.

Suggested Citation

  • Agyei-Boapeah, Henry, 2019. "Foreign acquisitions and firm performance: The moderating role of prior foreign experience," Global Finance Journal, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:glofin:v:42:y:2019:i:c:s104402831730323x
    DOI: 10.1016/j.gfj.2018.02.001
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    Cited by:

    1. Tongurai, Jittima & Vithessonthi, Chaiporn, 2022. "Learning, foreign operations and operating performance," Global Finance Journal, Elsevier, vol. 52(C).
    2. Jheyce Milena Silva Barros & Brigitte Renata Bezerra Oliveira & Telma Lúcia Andrade Lima & Marcos Felipe Falcão Sobral, 2024. "Corporate strategy evaluation (CORE): a new method to measure strategies in organizations," SN Business & Economics, Springer, vol. 4(6), pages 1-18, June.
    3. Likitwongkajon, Napaporn & Vithessonthi, Chaiporn, 2024. "Foreign investments and firm risk: Evidence from Germany," Global Finance Journal, Elsevier, vol. 59(C).

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    More about this item

    Keywords

    Internationalization; Foreign acquisition; Prior foreign experience; Financial performance; M&A;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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