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Multiple large shareholder coalitions, institutional ownership and investment decisions: Evidence from cross-border deals in Latin America

Author

Listed:
  • Carlos Pombo
  • Cristian Pinto-Gutierrez
  • Mauricio Jara-Betín

Abstract

This paper examines the relationship between multiple large shareholder coalitions and the probability of completing a cross-border merger and acquisitions (M&As). Using different power distribution indicators based on Shapley-Shubik values for cooperative games for a sample of acquirers' firms from Latin America, our results suggest that a higher likelihood of coalitions among large shareholders increases the probability of completing a cross-border deal. This relationship is more pronounced in acquirer firms with more institutional investors and ownership stakes. We also find that multiple large shareholder coalitions are positively associated with the long-term operating performance of an acquirer firm involved in a cross-border deal. As a result, colluding blockholders in acquirer firms are more prone to attempt risky cross-border acquisitions. However, when they do, the acquisitions tend to be value-enhancing in the long term.

Suggested Citation

  • Carlos Pombo & Cristian Pinto-Gutierrez & Mauricio Jara-Betín, 2022. "Multiple large shareholder coalitions, institutional ownership and investment decisions: Evidence from cross-border deals in Latin America," Documentos CEDE 20333, Universidad de los Andes, Facultad de Economía, CEDE.
  • Handle: RePEc:col:000089:020333
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    More about this item

    Keywords

    Blockholders; coalitions; Power Indices; Cross-border deals; institutional ownership; Latin America;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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