The Impact of Country Diversification on Wealth Effects in Cross-Border Mergers

Halil Kiymaz and Tarun K Mukherjee

The Financial Review, 2000, vol. 35, issue 2, 37-58

Abstract: We posit that country diversification via cross-border mergers creates wealth by providing benefits for firms that are not available to their shareholders. We hypothesize that these benefits are inversely related to the extent of co-movement in the economies of the bidder's and target's countries. We examine the wealth effects of U.S. targets and bidders involved in cross-border mergers with firms in other countries during 1982-91. We show that wealth effects vary, depending on country affiliations of two merging firms, and are inversely related to the degree of economic co-movement between the two countries. Copyright 2000 by MIT Press.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:35:y:2000:i:2:p:37-58

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