Enhancing the Benefits for India and Other Developing Countries in the Doha Development Agenda Negotiations

Anusha Chari, Paige Ouimet and Linda Tesar ()
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Anusha Chari: University of Michigan
Paige Ouimet: University of Michiganr Outsourcing

No 511, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: When firms from developed markets acquire firms in emerging markets, marketcapitalization-weighted monthly joint returns show a statistically significant increase of 1.8%. Panel data estimations suggest that the value gains from cross-border M&A transactions stem from the transfer of majority control from emerging-market targets to developed market acquirers—joint returns range from 5.8% to 7.8% when majority control is acquired. Announcement returns for acquirer and target firms estimate the distribution of gains and show a statistically significant increase of 2.4% and 6.9%, respectively. The evidence suggests that the stock market anticipates significant value creation from cross-border transactions that involve emerging-market targets leading to substantial gains for shareholders of both acquirer and target firms.

Pages: 55 pages
Date: 2004
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