Persistent performance and interaction effects in sequential cross-border mergers and acquisitions
This study examines the short-term wealth impact of cross-border mergers and acquisitions (M&As) by acquiring companies in 70 countries between the years of 1978 and 2008. We find persistent stock performance in sequential cross-border M&As; that is, the acquiring firms that gained positive (negative) abnormal returns in previous cross-border acquisitions are more likely to experience positive (negative) abnormal returns in subsequent cross-border acquisitions. The persistency of the stock performance is stronger in situations when the elapsed time between the sequential acquisitions is shorter. We find that the persistent stock performance is affected by investor sentiment as well as the choice of cash payments in the sequential cross-border M&As. We do not find that the acquiring firm's operating performance affects the persistency of the stock performance.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dos Santos, Marcelo B. & Errunza, Vihang R. & Miller, Darius P., 2008. "Does corporate international diversification destroy value? Evidence from cross-border mergers and acquisitions," Journal of Banking & Finance, Elsevier, vol. 32(12), pages 2716-2724, December.
- Marina Martynova & Luc Renneboog, 2010.
"Spillover of Corporate Governance Standards in Cross-Border Mergers and Acquisition,"
in: The Law and Economics of Corporate Governance, chapter 3
Edward Elgar Publishing.
- Martynova, Marina & Renneboog, Luc, 2008. "Spillover of corporate governance standards in cross-border mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 200-223, June.
- Martynova, M. & Renneboog, L.D.R., 2008. "Spillover of Corporate Governance Standards in Cross-Border Mergers and Acquisitions," Discussion Paper 2008-008, Tilburg University, Tilburg Law and Economic Center.
- Martynova, M. & Renneboog, L.D.R., 2008. "Spillover of Corporate Governance Standards in Cross-Border Mergers and Acquisitions," Discussion Paper 2008-18, Tilburg University, Center for Economic Research.
- Morck, Randall & Yeung, Bernard, 1992. "Internalization : An event study test," Journal of International Economics, Elsevier, vol. 33(1-2), pages 41-56, August.
- Kathleen Fuller & Jeffry Netter & Mike Stegemoller, 2002. "What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions," Journal of Finance, American Finance Association, vol. 57(4), pages 1763-1793, 08.
- Lee, Charles M C & Shleifer, Andrei & Thaler, Richard H, 1991.
" Investor Sentiment and the Closed-End Fund Puzzle,"
Journal of Finance,
American Finance Association, vol. 46(1), pages 75-109, March.
- Charles Lee & Andrei Shleifer & Richard Thaler, 1990. "Investor Sentiment and the Closed-End Fund Puzzle," NBER Working Papers 3465, National Bureau of Economic Research, Inc.
- Lee, Charles & Shleifer, Andrei & Thaler, Richard H., 1991. "Investor Sentiment and the Closed-End Fund Puzzle," Scholarly Articles 27693394, Harvard University Department of Economics.
- Richard J. Rosen, 2006.
"Merger Momentum and Investor Sentiment: The Stock Market Reaction to Merger Announcements,"
The Journal of Business,
University of Chicago Press, vol. 79(2), pages 987-1017, March.
- Richard J. Rosen, 2004. "Merger momentum and investor sentiment: the stock market reaction to merger announcements," Working Paper Series WP-04-07, Federal Reserve Bank of Chicago.
- Jeffrey Wurgler & Ekaterina Zhuravskaya, 2000.
"Does Arbitrage Flatten Demand Curves for Stocks?,"
Yale School of Management Working Papers
ysm152, Yale School of Management, revised 01 Nov 2001.
- Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
- Malcolm Baker & Jeffrey Wurgler, 2006.
"Investor Sentiment and the Cross-Section of Stock Returns,"
Journal of Finance,
American Finance Association, vol. 61(4), pages 1645-1680, 08.
- Malcolm Baker & Jeffrey Wurgler, 2004. "Investor Sentiment and the Cross-Section of Stock Returns," NBER Working Papers 10449, National Bureau of Economic Research, Inc.
- Alexandridis, George & Antoniou, Antonios & Zhao, Huainan, 2008. "Belief asymmetry and gains from acquisitions," Journal of Multinational Financial Management, Elsevier, vol. 18(5), pages 443-460, December.
- Ali, Ashiq & Hwang, Lee-Seok & Trombley, Mark A., 2003. "Arbitrage risk and the book-to-market anomaly," Journal of Financial Economics, Elsevier, vol. 69(2), pages 355-373, August.
- Cakici, Nusret & Hessel, Chris & Tandon, Kishore, 1996. "Foreign acquisitions in the United States: Effect on shareholder wealth of foreign acquiring firms," Journal of Banking & Finance, Elsevier, vol. 20(2), pages 307-329, March.
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Verma, Rahul & Verma, Priti, 2007. "Noise trading and stock market volatility," Journal of Multinational Financial Management, Elsevier, vol. 17(3), pages 231-243, July.
- Kang, Jun-Koo, 1993. "The international market for corporate control *1: Mergers and acquisitions of U.S. firms by Japanese firms," Journal of Financial Economics, Elsevier, vol. 34(3), pages 345-371, December.
- Petmezas, Dimitris, 2009. "What drives acquisitions?: Market valuations and bidder performance," Journal of Multinational Financial Management, Elsevier, vol. 19(1), pages 54-74, February.
- Pontiff, Jeffrey, 2006. "Costly arbitrage and the myth of idiosyncratic risk," Journal of Accounting and Economics, Elsevier, vol. 42(1-2), pages 35-52, October.
- Vasconcellos, G. M. & Kish, R. J., 1998. "Cross-border mergers and acquisitions: the European-US experience," Journal of Multinational Financial Management, Elsevier, vol. 8(4), pages 431-450, November.
- Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2009. "Learning, hubris and corporate serial acquisitions," Journal of Corporate Finance, Elsevier, vol. 15(5), pages 543-561, December.
- Antonios Antoniou & Jie Guo & Dimitris Petmezas, 2008. "Merger momentum and market valuations: the UK evidence," Applied Financial Economics, Taylor & Francis Journals, vol. 18(17), pages 1411-1423.
When requesting a correction, please mention this item's handle: RePEc:eee:mulfin:v:21:y:2011:i:1:p:18-39. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.