Cross-border mergers and acquisitions by emerging country banks: What do acquisition premiums tell us?

Canan Yildirim, Mouloud Tensaout () and Veronika Belousova
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Canan Yildirim: ESC [Rennes] - ESC Rennes School of Business
Mouloud Tensaout: ARGUMans - Laboratoire de recherche en gestion Le Mans Université - UM - Le Mans Université
Veronika Belousova: HSE - Vysšaja škola èkonomiki = National Research University Higher School of Economics [Moscow]

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Abstract: Our knowledge of international expansion motives and strategies of emerging country banks (ECBs) is limited. Using a worldwide sample of cross-border mergers and acquisitions (CBMAs) and a mixed model, we explore firm- and country-level determinants of acquisition premiums. We show that the effects of target bank and target country characteristics on premiums are contingent on the acquirer's home country: emerging vs. advanced. More specifically, compared to advanced country acquirers, ECBs pay lower premiums for targets that are: (i) more efficient; (ii) offering better functional diversification opportunities; and (iii) based in markets with higher growth prospects or better institutional development levels. Furthermore, state-owned ECBs pay higher premiums. Our findings suggest that CBMAs undertaken by ECBs might not be motivated by competence-enhancing strategies while being less sensitive to the target country's institutional development.

Keywords: Emerging country banks; Mergers and acquisitions; Acquisition premium; Multi-level analysis; Comparative analysis; Mixed model (search for similar items in EconPapers)
Date: 2023-10
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Citations: View citations in EconPapers (1)

Published in Research in International Business and Finance, 2023, 66, pp.102042. ⟨10.1016/j.ribaf.2023.102042⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04224961

DOI: 10.1016/j.ribaf.2023.102042

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