Multiple large shareholder coalitions, institutional ownership and investment decisions: Evidence from cross-border deals in Latin America

Carlos Pombo, Cristian Pinto-Gutierrez () and Mauricio Jara-Betín ()

No 20333, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This paper examines the relationship between multiple large shareholder coalitions and the probability of completing a cross-border merger and acquisitions (M&As). Using different power distribution indicators based on Shapley-Shubik values for cooperative games for a sample of acquirers' firms from Latin America, our results suggest that a higher likelihood of coalitions among large shareholders increases the probability of completing a cross-border deal. This relationship is more pronounced in acquirer firms with more institutional investors and ownership stakes. We also find that multiple large shareholder coalitions are positively associated with the long-term operating performance of an acquirer firm involved in a cross-border deal. As a result, colluding blockholders in acquirer firms are more prone to attempt risky cross-border acquisitions. However, when they do, the acquisitions tend to be value-enhancing in the long term.

Keywords: Blockholders; coalitions; Power Indices; Cross-border deals; institutional ownership; Latin America (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Pages: 50
Date: 2022-08-04
New Economics Papers: this item is included in nep-cfn, nep-com and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:020333

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