The wealth effects of acquiring foreign government-owned corporations: evidence from US-listed acquirers in cross-border mergers and acquisitions
We study the short- and long-term effects of acquiring targets that are government owned, which we refer to as Government-Owned Corporations (GOCs). Our sample of acquirers consists of US-listed public corporations, while the targets are GOCs based outside the US. In comparison to acquisitions of non-GOCs, we find that the wealth effects of acquiring GOCs are more favourable. We also find that GOC targets located in countries with poorer governance characteristics positively impact the shareholders’ wealth of the acquirer. Our evidence suggests that acquirers of foreign GOCs exploit target country governance imperfections to their advantage.
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Volume (Year): 21 (2011)
Issue (Month): 24 (December)
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