 How Country Reputation Differentials Influence Market Reaction to International AcquisitionsChengguang Li, Oded Shenkar, William E. Newburry and Yinuo Tang Journal of Management Studies, 2021, vol. 58, issue 6, 1609-1639 Abstract: This study investigates the influence of country reputation differentials on market reaction to international acquisitions. Building on social identity theory, we argue that market reactions are more positive when the reputation of the acquirer’s country is better than that of the target’s, since a country’s reputation imprints on its firms due to social categorization. Thus, firms from countries with better reputations are perceived as having superior skills/capabilities and the reputation difference suggests that the acquirer is able to identify/exploit undervalued targets and leverage synergies. The influence of country reputation should be weaker when additional information on the merging firms is present, through news media reporting and analyst coverage of the merging firms as well as the acquirer’s prior acquisition track record, since market investors will rely less on country reputation. We find support for our hypotheses for a sample of 4,792 international acquisitions across 48 countries from 2009 to 2017. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jomstd:v:58:y:2021:i:6:p:1609-1639 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Management Studies is currently edited by Timothy Clark, Steven W. Floyd and Mike Wright More articles in Journal of Management Studies from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.