IDEAS home Printed from https://ideas.repec.org/a/pal/jintbs/v45y2014i9p1096-1114.html
   My bibliography  Save this article

Cross-border acquisitions of state-owned enterprises

Author

Listed:
  • Surendranath Rakesh Jory

    (University of Sussex, Brighton, UK)

  • Thanh Ngoc Ngo

    (East Carolina University, Greenville, USA)

Abstract

We examine the decision of private sector enterprises from developed countries to acquire state-owned enterprises (SOEs) abroad. Using a sample of US firms buying targets abroad between 1987 and 2009, we find that bidders of SOE fare worse than bidders of non-SOE both in terms of stock price and operating performance. We also find that the quality of the target country location – as captured by the Economic Freedom of the World (EFW) Index – greatly influences the choice of SOE targets. Interestingly, the quality ranking of the target country location on the EFW Index and the performance of the bidder of a SOE target are inversely related. Our findings imply that the characteristics of the location of the target firm affect bidders’ choice of targets in international mergers and acquisitions; otherwise, acquiring non-SOEs is more lucrative. Furthermore, either limiting conditions in the business environment force managers to work harder to generate more wealth, or in weak legal and business environments buying targets with ties to the government yields extra wealth. Our findings are highly relevant within the international business literature as they influence the choice of foreign market entry mode.

Suggested Citation

  • Surendranath Rakesh Jory & Thanh Ngoc Ngo, 2014. "Cross-border acquisitions of state-owned enterprises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(9), pages 1096-1114, December.
    • Handle: RePEc:pal:jintbs:v:45:y:2014:i:9:p:1096-1114
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/jibs/journal/v45/n9/pdf/jibs201441a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: http://www.palgrave-journals.com/jibs/journal/v45/n9/full/jibs201441a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tang, Ryan W., 2019. "FDI expansion speed of state-owned enterprises and the moderating role of market capitalism: Evidence from China," International Business Review, Elsevier, vol. 28(6), pages 1-1.
    2. Qiuyang Gu & Chunhua Ju & Fuguang Bao, 2020. "The Cross-Border Mergers and Acquisitions of Local State-Owned Enterprises: The Role of Home Country Government Involvement," Sustainability, MDPI, vol. 12(7), pages 1-23, April.
    3. Luc Renneboog & Peter G. Szilagyi & Cara Vansteenkiste, 2017. "Creditor rights, claims enforcement, and bond performance in mergers and acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(2), pages 174-194, February.
    4. Renneboog, Luc & Szilagyi, Peter & Vansteenkiste, Cara, 2017. "Creditor rights, claims enforcement, and bond returns in mergers and acquisitions," Other publications TiSEM ef3ad779-66b4-4fca-a8e8-7, Tilburg University, School of Economics and Management.
    5. Li, Xiaoqing & Quan, Rose & Stoian, Maria-Cristina & Azar, Goudarz, 2018. "Do MNEs from developed and emerging economies differ in their location choice of FDI? A 36-year review," International Business Review, Elsevier, vol. 27(5), pages 1089-1103.
    6. Zaiyang Xie & Runhui Lin & Jie Mi & Na Li, 2019. "Improving Enterprises’ Cross-Border M&A Sustainability in the Globalization Age—Research on Acquisition and Application of the Foreign Experience," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    7. Zhu, Bing & Xia, Xiaoxue & Zheng, Xiaojia, 2021. "One way out of the share pledging quagmire: Evidence from mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 71(C).
    8. Surendranath R. Jory & Thanh N. Ngo & Daphne Wang & Amrita Saha, 2015. "The market response to corporate scandals involving CEOs," Applied Economics, Taylor & Francis Journals, vol. 47(17), pages 1723-1738, April.
    9. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 650-699.
    10. Valentino, Alfredo & Caroli, Matteo & Mayrhofer, Ulrike, 2018. "Establishment modes and network relationships of foreign subsidiaries," International Business Review, Elsevier, vol. 27(6), pages 1250-1258.
    11. Jory, Surendranath R. & Ngo, Thanh N., 2015. "The wealth effects of acquiring foreign divested assets," International Business Review, Elsevier, vol. 24(2), pages 235-245.
    12. Renneboog, Luc & Vansteenkiste, Cara, 2019. "Failure and success in mergers and acquisitions," Other publications TiSEM 9baa3ffc-67cb-4647-9da5-a, Tilburg University, School of Economics and Management.
    13. Vittoria G. Scalera & Debmalya Mukherjee & Lucia Piscitello, 2020. "Ownership strategies in knowledge-intensive cross-border acquisitions: Comparing Chinese and Indian MNEs," Asia Pacific Journal of Management, Springer, vol. 37(1), pages 155-185, March.
    14. Xie, Zaiyang & Wang, Liang, 2022. "Returnee managers as an asset for emerging market multinational enterprises: Chinese cross-border acquisitions (2008–2017)," Journal of World Business, Elsevier, vol. 57(2).
    15. Daphne W. Yiu & William P. Wan & Kelly Xing Chen & Xiaocong Tian, 2022. "Public sentiment is everything: Host-country public sentiment toward home country and acquisition ownership during institutional transition," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1202-1227, August.
    16. Datta, Deepak K. & Basuil, Dynah A. & Agarwal, Ankita, 2020. "Effects of board characteristics on post-acquisition performance: A study of cross-border acquisitions by firms in the manufacturing sector," International Business Review, Elsevier, vol. 29(3).
    17. Faff, Robert & Prasadh, Shyaam & Shams, Syed, 2019. "Merger and acquisition research in the Asia-Pacific region: A review of the evidence and future directions," Research in International Business and Finance, Elsevier, vol. 50(C), pages 267-278.
    18. Del Bo, Chiara D. & Ferraris, Matteo & Florio, Massimo, 2017. "Governments in the market for corporate control: Evidence from M&A deals involving state-owned enterprises," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 89-109.
    19. Jory, Surendranath R. & Ngo, Thanh N. & Wang, Daphne, 2016. "Credit ratings and the premiums paid in mergers and acquisitions," Journal of Empirical Finance, Elsevier, vol. 39(PA), pages 93-104.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jintbs:v:45:y:2014:i:9:p:1096-1114. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.