Is cultural distance a bane or a boon for cross-border acquisition performance?

Literature has offered diverse explanations of the relationship between cultural distance and acquisition performance, pointing to both positive and negative effects. In this paper, we build on these findings and attempt to reconcile the conflicting research streams. We suggest that the effect of cultural distance on cross-border acquisition performance depends on the level of acquisition experience of the acquirer. More internationally experienced acquirers are more likely to be aware of cross-border acquisition pitfalls and are more skilled at resolving acquisition related conflicts; this allows the acquirer to benefit from cultural differences, ultimately leading to higher acquisition performance. Performance of culturally distant cross-border acquisitions launched by inexperienced acquirers is lower because such acquirers are unlikely to have a culturally sensitive anti-conflict action plan, which affects the ability of the acquirer to benefit fully from cultural distances. Albeit we stipulate that experience with domestic acquisitions affects positively the relation between cultural distance and acquisition performance, we do not find support. We empirically test our model with a comprehensive database of 1223 cross-border acquisitions launched during the 2009–2010 period.     

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

During the recent decade, the world has witnessed the rapid growth of MNEs from emerging economies. Their increasing participation in cross-border mergers and acquisitions has raised great attention in the extant literature. This study evaluates the value creation from these cross-border transactions from two representative emerging countries, namely China and India, and determines factors that result in the different performance of these international acquisition activities. Cross-border acquisitions conducted by these countries’ companies indeed lead to significant shareholder wealth creation. Furthermore, Indian shareholders are more likely to benefit from deals in small cultural distance countries, while Chinese investors gain from the cross-border expansion of manufacturing companies. Location also affects the performance of cross-border acquisitions, with acquisitions into developed countries generating higher returns to shareholders. Our sample consists of 203 Indian and 63 Chinese cross-border deals over the period 2000–2010 and our results hold after controlling for various deal-level and firm-level characteristics.     

Board experience and value creation in cross-border acquisitions: The role of acquirer and target country institutions

Our study investigates the effects of board acquisition experience on value creation in cross-border acquisitions and the dependence of this relationship on acquirer and target country institutions. We draw on cross-border acquisition research and institution-based corporate governance research to argue that the effect of board acquisition experience depends on the institutional characteristics of the acquirer and target countries and on cultural differences between these two countries. Based on 1775 cross-border acquisitions of U.S. and European acquirers, we show a positive effect of board acquisition experience on the announcement returns of cross-border acquisitions, which is even stronger when the target country’s takeover regulations are less friendly and when the target and acquirer countries are culturally more distant.     

Language and cross-border acquisitions: An exploratory study

The aim of this study is to examine the effects of language on post-acquisition performance of US based cross-border acquisitions. In this study we attempt to show that post-acquisition performance is explained by the linguistic distance between the acquirer and target country of the acquisition. In addition, this study explains the moderating role of acquisition experience in the linguistic distance-acquisition performance relationship. An analysis of 1120 US acquisitions in 33 target countries over a period of 6 years (2007 to 2012) demonstrates that linguistic distance has explanatory value in post-acquisition performance. Our analysis also demonstrates that the acquirer’s cross-border acquisition experience plays a significant role as a moderator of this linguistic distance—acquisition performance relationship. In addition, our analysis of lingua franca proficiency also lends support to our hypothesized relationships and demonstrates the robustness of our findings.     

National economic disparity and cross-border acquisition resolution

This paper explores the effects of national economic disparity on the completion or abandonment of cross-border acquisitions by combining behavioral perspectives of risky decision making and theories of organizational learning. Using a sample of 2445 cross-border acquisitions announced between 1985 and 2008, we show that an acquisition is less likely to be completed when the acquirer is from a more developed country vis-a-vis the target than when the acquirer is from a less developed country. Furthermore, the higher the economic development level of the acquirer’s country relative to that of the target, the less likely the deal is to be completed. We also find that the time elapsed between the acquisition announcement and completion dates is shorter as the economic development level of the acquirer’s country relative to that of the target is higher.     

Do cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms

Despite the new momentum in cross-border mergers and acquisitions (M&As) by emerging market firms, we have a limited understanding of the impact of these activities. Drawing on signalling theory and the institution-based view, this paper examines the extent of stock market reactions to the announcement of cross-border M&A deals, based on an event study of a sample of Chinese firms during the period 2000–2012. The findings indicate that the announcement of cross-border M&As results in a positive stock market reaction; this effect is more significant in the mainland Chinese stock markets (Shanghai and Shenzhen) than that in the Hong Kong market. The shareholders of Chinese firms that acquire a target firm in a host country with a low level of political risk gain higher cumulative abnormal returns than those firms targeting companies in countries with a high level of political risk. The shareholders of Chinese state-owned enterprises experience lower abnormal returns compared with those of Chinese privately owned firms when engaging in cross-border M&A deals.     

Economic nationalism and foreign acquisition completion: The case of China

Extending institutional theory, we incorporate a neglected but important component of formal institution, economic nationalism, into a model that specifies its effects on cross-border acquisition success. We suggest that economic nationalism has a dynamic nature and sees the interaction between protectionism and liberalism. As such, it exerts both positive and negative effects on foreign investments, contingent on how these investments are perceived as aligned with the national interests as reflected by national security considerations, foreign relations, and growth strategy. Using a data set containing 7275 announced cross-border acquisition deals in China during 1985–2010, the study finds that (1) when an acquisition activity targets essential industries or state-owned enterprises, it is less likely to be completed because of provoked national economic security concerns; and (2) when an acquirer brings technology and/or capital, or/and helps to restructure poorly-performing firms, or/and the acquirer comes from a country with good foreign relations with China, the acquisition is considered as safe and helpful for the country's development, and it is more likely to be completed.     

National cultural distance and initial foreign acquisition performance: The moderating effect of integration

This paper examines the effect of national cultural distance on the performance of foreign acquisitions. While some studies have argued that this effect should be negative and others that it should be positive, we argue that this depends on the level of post-acquisition integration. We hypothesize that large differences in national culture reduce foreign acquisition performance if the acquired unit is tightly integrated into the acquirer, but that they enhance acquisition performance if post-acquisition integration is limited. Analyzing a sample of 102 cross-border acquisitions by Dutch firms in 30 countries, we find strong empirical support for this hypothesis.     

Impact of the Financial Crisis on Cross‐Border Mergers and Acquisitions and Concentration in the Global Banking Industry

The global banking industry has seen dramatic changes in the past 40 years. Most recently, the financial liberalization of emerging markets and the global financial crisis have significantly impacted the market share of banks worldwide. This article investigates the impact of the 2007–2008 financial crisis on cross‐border mergers and acquisitions (M&As) in the banking sector and emphasizes the role of emerging‐market banks in the postcrisis consolidation trend. Using M&A data and concentration data over the period 2000–2013, our analysis indicates that the financial crisis had a significant impact on worldwide M&As, especially on the direction of the transactions. Emerging‐market banks appear to be major acquirers in the postcrisis period, targeting both neighboring countries and developed economies in Europe. We also observe an increase in bank concentration in developed markets most hit by the financial crisis, especially in the United States and the United Kingdom, whereas bank concentration decreased in emerging markets. © 2015 Wiley Periodicals, Inc.     

Institutional investors and cross-border mergers and acquisitions: The 2000–2018 period

Using a sample of mergers and acquisitions (M&As) from 26 countries over 2000–2018, we find that domestic institutional investors facilitate both domestic and cross-border M&As. The facilitation effect is more pronounced for domestic than cross-border M&As. When the acquirer country has greater financial freedom or better investor protection than the target country, domestic institutional investors facilitate cross-border M&As more effectively. As Ordinary Least Squares regressions are not the best approach regarding cross-border M&As, we confirm that the main results are robust to Zero-inflated Poisson regressions. Foreign institutional investors' influence on cross-border M&As is stronger when the sample excludes the United States.     

Do innovative emerging market cross-border acquirers create more shareholder value? Evidence from India

This study attempts to investigate the role of absorptive capacity of emerging market firms in creating shareholder value from developed market acquisitions. It analyzes the cumulative abnormal return of cross border acquisitions of listed Indian firms in Europe focusing on acquirers’ research intensity. The study discovers a U-shaped relationship between research intensity of Indian acquirers and their cumulative abnormal return following acquisitions in Europe. As such, firms with no research capacity can benefit from the acquisition by accessing advanced targets, although firms with extensive research capacity outperform any of their Indian competitors as these firms have the absorptive capacity to not only exploit but also explore the knowledge base of the acquired target. Furthermore, we found a positive effect of the acquisition of a high-tech target company, regardless of the absorptive capacity of the acquirer. We also found that business group membership has a positive impact on shareholder value, although horizontal acquisitions as compared to vertical and unrelated deals have a significantly negative impact for these companies. This result is again linked to the more explorative nature of vertical and unrelated acquisitions in comparison with horizontal deals that are more based on the exploitation of existing resources and capabilities.     

Cross-border acquisition in services: Comparing ownership choice of developed and emerging economy MNEs in India

Despite rapid increase in cross-border acquisitions (CBAs), prior research has not examined ownership choice of foreign MNEs investing in the services sector in emerging economies. Drawing on multiple strands of literature, we posit acquirer's ownership choice (partial versus full acquisition) to be influenced by type of service offering (soft versus hard), institutional distance between acquirer and target nation, and acquirer's country-of-origin (emerging versus developed economy). Empirical analysis of 385 CBAs undertaken in India over an 11-year period provides evidence that services, in particular soft services, and high institutional distance increases the likelihood of full acquisition by emerging economy acquirers. However, acquirers from developed economies show preference for partial acquisition under similar circumstances.     

The West and China: Shake‐up in global banking?

The global recession of 2007–2009 is altering the structure of the global banking industry. Many Western banks suffered after the fallout of the subprime mortgage market in 2007 and are having to respond to the policy ramifications of the crisis and recession. China's banks, however, have undergone performance improvements in a number of areas, both leading into and during the crisis, and they are now emerging as significant players in the global banking market.¹ This “shake‐up” in global banking is occurring in five areas: independence, profitability, market focus, business models, and talent. © 2011 Wiley Periodicals, Inc.     

Do cross-border acquisitions create value? Evidence from overseas acquisitions by Chinese firms

Based on the dynamic capability and organizational learning perspectives, we examine whether acquirers from emerging economies can create value for their shareholders in cross-border mergers and acquisitions, and the key drivers which may influence any such value creation. A sample of 367 cross-border mergers and acquisitions between 2000 and 2011 involving Chinese listed companies as the acquirers was analyzed to highlight the relationship between the cultural distance involved and the acquirers’ market valuation. On average, such cross-border transactions created value for the acquirer's shareholders, but cultural distance was negatively related to the extent of such value creation. Larger firms, more experienced firms, and acquisitions within the same industry were found to be less affected by cultural distance, emphasizing the importance of learning and absorptive capability, but employing a financial advisor did not seem to help. Thus firms with greater absorptive capacity were found better able to overcome the difficulties caused by cultural differences. Implications for research and practice are discussed.     

金融危机下的中国企业跨国并购

由于目前金融危机的国际经济环境特点,我国企业在跨国并购过程中要注意存在的问题和障碍,特别是金融危机所带来的更为严重的跨国并购风险：政治法律风险、战略决策风险和资本筹集风险。为防止风险,跨国并购要分析东道国的政治法律环境,选好目标企业,发挥行业协会和中介机构的作用,作好人力资源、技术文化整合等。     

Wealth effects on cross-border acquisition firms from emerging economies

Cross-border acquisitions (CBAs), as a corporate expansion strategy, are being espoused by emerging market firms (EMFs) to overcome their competitive disadvantage at the global level. The objective of this paper is to analyse the wealth effects of cross-border acquisition announcement on the acquiring firms from emerging economies during the period of 2001–17. Wealth effects have been measured in terms of short-term change in equity prices (investors' reaction) around the public announcement of 553 and 125 overseas acquisitions by Indian and Chinese listed firms respectively. The investors' reaction to the acquisition of a foreign target has been captured using the event study methodology. Further, a disaggregated analysis has been conducted to gauge the impact of various deal-specific factors, the legal structure of the target firm and the development status of the target country on the wealth creation potential of a cross-border acquisition.Both Indian and Chinese investors have responded favourably to the announcement of international acquisitions as exhibited in significant and positive average abnormal returns of 0.71% and 0.23% respectively on the event day. Further, it is revealing to note that investors in these economies differ widely with regard to their perception pertaining to the method of payment and acquisition strategy. At the same time, the extent of wealth creation is higher when acquired firms are based in developed economies possessing high quality resources and advanced technology along with better institutional and regulatory milieu; Indian as well as Chinese markets have experienced larger abnormal returns on acquiring advanced vis-à-vis developing market firms.     

The Determinants of Target Returns in European Bank Mergers

Announcement period abnormal returns for target banks are generally considered low compared to non-bank mergers. In this paper the factors that influence those returns in European bank mergers is examined. Sixty-seven deals from the EU, Norway and Switzerland are studied for which both targets and acquirers were listed companies (some of these being cross-border mergers and acquisitions), and find that European cross-border acquisitions tend to generate higher returns than national acquisitions. Cash deals and deals that are settled by a mix of cash, equity and loan notes create higher returns than equity transactions. It was also found that the target profitability and the relative asset growth rate have significant positive relation with the stock return. In addition, the significance of loan quality, the relative cost to income ratio and the ratio of loans to deposits, all point to the importance of efficiency in the European financial services industry.     

Domestic mergers and acquisitions in BRICS countries: Acquirers and targets

We study the firm value determinants for domestic acquisitions within BRICS countries considering both acquirer and target shareholders. Targets earn significant positive announcement returns of 1.45% on average. Acquirers lose slightly. We employ a comprehensive set of explanatory variables and test for cross-sectional return drivers. Target returns are negatively related to pre-announcement returns and firm size, while they are positively related to GDP growth. Our results are consistent with insider trading capturing some of the target excess returns, which are highest for small targets based in countries with high recent GPD growth.     

中国上市公司并购长期绩效研究

从2000~2004年发生于我国证券市场的208起上市公司并购情况来看,收购公司在并购后1~3年实现显著负的超常收益,即收购方发生了价值损失,遭受了显著的财富损失。同时,国有控股公司的并购绩效好于非国有公司,同城并购表现好于异域并购,多元化并购绩效差于同业并购,优势控股公司表现差于非优势控股公司。此外,与资产收购相比,股权收购的长期绩效表现更好。     

国际银行业并购的效应分析及对我国的启示

银行业的并购在金融业的发展中始终占据着重要地位,最近几年令人惊叹的银行并购浪潮中充分显示了这一点。面对国际金融服务领域更加激烈的竞争,为增强自身的竞争实力,众多的国际金融集团正在不断地合并、重组,以图在全球金融市场一体化的进程中占有一席之地。席卷全球的银行并购潮,正在促使全球银行业发生巨大的变革。