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Is the grass on the other side greener? Testing the cross-border effect for U.S. acquirers

Yun Meng () and Ninon K. Sutton ()
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Yun Meng: University of Wisconsin-Green Bay
Ninon K. Sutton: University of South Florida

Review of Quantitative Finance and Accounting, 2017, vol. 48, issue 4, 917-937

Abstract: Abstract Why do U.S. acquirers fare worse when acquiring targets in foreign countries than when acquiring domestic targets? This paper investigates reasons for the so called “cross-border effect” by examining the influence of target public status and competitiveness of the takeover market in the target country. Our findings show that the listing status of the target drives the cross-border effect in two opposite directions: acquirers of private targets fare worse in cross-border takeovers, while acquirers of public targets experience significantly higher gains in acquisitions of foreign targets. The positive cross-border benefit for acquirers of public targets is more pronounced if the target is from a country with a less competitive takeover market.

Keywords: Mergers; Acquisitions; Cross-border takeovers (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2017
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