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Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms

Author

Listed:
  • Mark Humphery-Jenner

    (University of New South Wales, Tilburg University)

  • Zacharias Sautner

    (University of Amsterdam, Duisenberg school of finance)

  • Jo-Ann Suchard

    (University of New South Wales)

Abstract

We study the role of private equity firms in cross-border mergers and acquisitions. We find that private equity-owned firms are more likely to become targets in crossborderM&A transactions. This effect is particularly strong in transactions where the target or its shareholders actively reach out for an acquirer. On average, cross-borderdeals with private equity-involvement are not associated with higher announcement returns. However, announcement returns are higher if the acquirer is owned by a private equity firm and the target is from a country with poor corporate governance. We provide evidence indicating that the international networks and connections that result from prior cross-border deals can explain why private equity firms create value in such deals. Our findings suggest that private equity firms can help to reduce information asymmetries in certain cross-border M&A deals. We perform several tests to address possible endogeneity concerns.

Suggested Citation

  • Mark Humphery-Jenner & Zacharias Sautner & Jo-Ann Suchard, 2012. "Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms," Tinbergen Institute Discussion Papers 12-031/2/DSF32, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20120031
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    References listed on IDEAS

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    Cited by:

    1. Christofi, Michael & Vrontis, Demetris & Thrassou, Alkis & Shams, S.M. Riad, 2019. "Triggering technological innovation through cross-border mergers and acquisitions: A micro-foundational perspective," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 148-166.
    2. Sara L. McGaughey & Pascalis Raimondos & Lisbeth La Cour, 2018. "What is a Foreign Firm? Implications for Productivity Spillovers," CESifo Working Paper Series 7109, CESifo.

    More about this item

    Keywords

    Mergers and acquisitions; private equity; information asymmetries;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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