Acquiring Control in Emerging Markets: Evidence from the Stock Market
Anusha Chari (),
Paige P. Ouimet and
Linda Tesar ()
No 10872, NBER Working Papers from National Bureau of Economic Research, Inc
When firms from developed markets acquire firms in emerging markets, market-capitalization-weighted monthly joint returns show a statistically significant increase of 1.8%. Panel data estimations suggest that the value gains from cross-border M&A transactions stem from the transfer of majority control from emerging-market targets to developed market acquirers' joint returns range from 5.8% to 7.8% when majority control is acquired. Announcement returns for acquirer and target firms estimate the distribution of gains and show a statistically significant increase of 2.4% and 6.9%, respectively. The evidence suggests that the stock market anticipates significant value creation from cross-border transactions that involve emerging-market targets leading to substantial gains for shareholders of both acquirer and target firms.
JEL-codes: F3 G3 (search for similar items in EconPapers)
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