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Performance of domestic and cross-border acquisitions: Empirical evidence from Russian acquirers

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  • Bertrand, Olivier
  • Betschinger, Marie-Ann

Abstract

This paper investigates the long-term impact of domestic and international acquisitions, initiated by Russian firms, on their operating performance. In general, acquisitions can be associated with synergy gains, internalization advantages, and higher market power. Acquisitions, however, may also give rise to agency problems as well as new integration and organizational costs, leading to an ambiguous overall impact on the performance of acquirers. Based on a sample of more than 600 acquirers we show that both domestic and international acquisitions tend to reduce the performance of acquirers compared to non-acquiring firms. Examining how different deal, firm and industry level characteristics moderate the value destroying effects of acquisitions, our results suggest that Russian acquirers suffer from the inability to leverage value due to low M&A experience and capability, especially when making international acquisitions.

Suggested Citation

  • Bertrand, Olivier & Betschinger, Marie-Ann, 2012. "Performance of domestic and cross-border acquisitions: Empirical evidence from Russian acquirers," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 413-437.
  • Handle: RePEc:eee:jcecon:v:40:y:2012:i:3:p:413-437
    DOI: 10.1016/j.jce.2011.11.003
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    Keywords

    M&A; Restructuring; FDI; Emerging countries; Russia;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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