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Cross-border acquisitions: Do labor regulations affect acquirer returns?

Author

Listed:
  • Ross Levine

    (University of California
    The NBER)

  • Chen Lin

    (University of Hong Kong)

  • Beibei Shen

    (Shanghai University of Finance and Economics)

Abstract

Do cross-country differences in labor regulations shape (1) acquiring firms’ announcement returns and post-acquisition profits, costs, and revenues from cross-border deals, (2) the selection of cross-border targets, or (3) the success rates of cross-border offers? We discover that acquiring firms enjoy smaller abnormal returns and post-deal performance gains with targets in stronger labor protection countries; acquirers are more likely to purchase labor-dependent targets in weak labor regulation countries and more likely to use cross-border acquisitions to enter new markets when targets are in stronger labor regulation countries; and offer success rates fall when targets are in stronger labor regulation countries.

Suggested Citation

  • Ross Levine & Chen Lin & Beibei Shen, 2020. "Cross-border acquisitions: Do labor regulations affect acquirer returns?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(2), pages 194-217, March.
    • Handle: RePEc:pal:jintbs:v:51:y:2020:i:2:d:10.1057_s41267-019-00281-1
    DOI: 10.1057/s41267-019-00281-1
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