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Shareholder Benefits from Corporate International Diversification: Evidence from U.S. International Acquisitions

Constatinos C Markides and Christopher D Ittner
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Constatinos C Markides: London Business School
Christopher D Ittner: University of Pennsylvania

Journal of International Business Studies, 1994, vol. 25, issue 2, 343-366

Abstract: Do international acquisitions—in contrast to their domestic counterparts—create value for the acquiring firms' shareholders? This study examines the valuation consequences of 276 U.S. international acquisitions made in the period 1975-1988, and provides direct evidence on the effect of international acquisitions on the market value of U.S. bidding firms. It is shown that, on average, international acquisitions create value for the acquiring firms. The study also finds that the value created is a function of the nature of the acquisition (e.g., related or unrelated); the nature of the bidding firm's industry (e.g., its concentration level and advertising intensity); the nature of the acquiring firm (e.g., it prior international experience and its current profitability); and the nature of the macroeconomic environment (e.g., tax regulations and the relative strength of the U.S. dollar).© 1994 JIBS. Journal of International Business Studies (1994) 25, 343–366

Date: 1994
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