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Foreign ownership restrictions and cross-border markets for corporate control

  • Moskalev, Sviatoslav A.
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    The paper investigates the link between host country laws restricting the ability of foreign bidders to conduct cross-border mergers and acquisitions (M&As) and the dynamics of domestic and foreign markets for corporate control. The results indicate that, as governments, especially governments of less wealthy, faster growing economies, relax their cross-border M&A laws, foreign bidders increase the number of cross-border M&As. The likelihood that foreign bidders establish cross-border M&As in which they obtain a controlling stake in the target is greater in host countries with less restrictive cross-border M&A laws. In such countries, foreign bidders are also more likely to use cross-border M&As than cross-border joint ventures as the means for entering the market. As host country cross-border M&A laws improve, foreign bidders are increasingly more likely to seek the types of entry modes that provide them with greater control over their investments.

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    File URL: http://www.sciencedirect.com/science/article/B6VGV-4Y05DJ8-1/2/9863c7c391d7dfbbe53855ca9f0ff3d2
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    Article provided by Elsevier in its journal Journal of Multinational Financial Management.

    Volume (Year): 20 (2010)
    Issue (Month): 1 (February)
    Pages: 48-70

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    Handle: RePEc:eee:mulfin:v:20:y:2010:i:1:p:48-70
    Contact details of provider: Web page: http://www.elsevier.com/locate/mulfin

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