Foreign acquisitions and firm performance: The moderating role of prior foreign experience

Henry Agyei-Boapeah

Global Finance Journal, 2019, vol. 42, issue C

Abstract: This paper relies on a sample of 9419 acquisitions by 1443 UK firms during 1988 to 2014 to investigate the impact of foreign acquisitions on corporate performance. Moreover, the moderating role of firms' prior exposure to foreign markets on the foreign acquisition-performance link is explored. The paper finds that, on average, foreign acquisitions have a negative impact on corporate performance. However, the negative impact of foreign acquisitions disappears under two circumstances: (1) when domestic firms undertake foreign acquisitions; and (2) when highly experienced multinationals undertake foreign acquisitions. Collectively, the findings imply that the benefits (costs) associated with foreign acquisitions are greater (lower) for new entrants into foreign markets and for highly experienced multinationals.

Keywords: Internationalization; Foreign acquisition; Prior foreign experience; Financial performance; M&A (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:42:y:2019:i:c:s104402831730323x

DOI: 10.1016/j.gfj.2018.02.001

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