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How crosslisting affects merger and acquisition activity

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  • Elena Skouratova
  • John Wald

Abstract

Consistent with crosslisting decreasing the cost of capital, we find that firms which issue American Depositary Receipts (ADRs) are much more likely to undertake an acquisition than non-crosslisted firms. The results do not appear to be driven by self-selection, as the increase in acquisitions is robust to a Heckman correction as well as to a fixed-effect analysis. Adding the home country’s shareholder rights to the analysis, we find that crosslisted firms increase their takeover activity primarily if they are from weak shareholder rights countries. This evidence is consistent with crosslisting reducing the cost of capital of firms from weak governance countries significantly, and this reduction in cost of capital allows these firms to pursue more domestic and international takeovers. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Elena Skouratova & John Wald, 2013. "How crosslisting affects merger and acquisition activity," Review of Quantitative Finance and Accounting, Springer, vol. 40(2), pages 319-339, February.
    • Handle: RePEc:kap:rqfnac:v:40:y:2013:i:2:p:319-339
    DOI: 10.1007/s11156-012-0279-y
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    Cited by:

    1. Arun Upadhyay & Hongchao Zeng, 2017. "Cash holdings and the bargaining power of R&D-intensive targets," Review of Quantitative Finance and Accounting, Springer, vol. 49(4), pages 885-923, November.
    2. Kai-Shi Chuang, 2017. "The role of investment banks on the impact of firm performance in mergers and acquisitions: evidence from the Asia-Pacific market," Review of Quantitative Finance and Accounting, Springer, vol. 48(3), pages 677-699, April.

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    More about this item

    Keywords

    Crosslisting; Takeovers; Bonding; G15; G34;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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