The Concurrent Impact of Cultural,Political, and Spatial Distances on International Mergers and Acquisitions

This paper explores the concurrent effects of cultural, political, and spatial distances on mergers and acquisitions (M&A) flows occurring between any two countries belonging to the whole European Union (27 States) or to the European Neighbours group (16 States) over the period 2000–11. In the econometric analysis, based on zero‐inflated models, we simultaneously estimate the probability of engaging in a cross‐border M&A and the intensity of the deals. This allows us to adequately model the two different mechanisms which may result in the absence of deals in the cross‐border bilateral M&A transactions. The absence of deals may be due to either the lack of any transactions or unsuccessful negotiations. Taking into account the effect of population, gross domestic product, technological capital, financial conditions and quality of the institutions, we find robust evidence that the multi‐dimensional distance between two countries negatively affects both the probability and the intensity of M&A deals.     

The Effects of Greenfield FDI and Cross‐border M&As on Total Factor Productivity

We examine the effects of greenfield FDI and cross‐border mergers and acquisitions (M&As) on total factor productivity (TFP) in developed and developing host countries of FDI. Using panel data for up to 123 countries over the period from 2003 to 2011, we find that greenfield FDI has no statistically significant effect on TFP, while M&As have a positive effect on TFP in the total sample. Greenfield FDI and M&As both appear to be ineffective in increasing TFP in the subsample of developing countries. In contrast, M&As have a strong and positive effect on TFP in the subsample of developed countries.     

Unpacking Institutional Distance: Addressing Human Capital Development and Emerging‐Market Firms’ Ownership Strategy in an Advanced Economy

As latecomers to global business competition, emerging‐market multinational companies (EMNCs) utilize cross‐border mergers and acquisitions (M&As) to quickly acquire strategic assets, resulting in an improved competitive position. Advanced markets with well‐established firms and well‐developed market‐supporting institutions become particularly important destinations for EMNCs’ foreign operations. Institutional distance, which represents conflicting legitimacy requirements between the host and home institutional environments, is expected to be negatively associated with the foreign acquirer's ownership position. The current study examines a sample of EMNCs’ cross‐border M&As in the United States between 2005 and 2011 and reveals the unique nature of EMNCs’ ownership strategies. Taking both formal and informal institutions into consideration, our findings suggest that EMNCs originating in countries with lower levels of human capital development may have more urgency in seeking ownership control in advanced markets and are less influenced by the negative association of institutional distance in their ownership strategy. © 2016 Wiley Periodicals, Inc.     

Intellectual property rights,imitation, and development. The effect on cross-border mergers and acquisitions

In this paper, we analyze whether the recent global process of strengthening and harmonization of intellectual property rights (IPRs) affects decisions of cross-border mergers and acquisitions (M&As). We investigate if IPRs have a differential effect across sectors of different technology content and for countries of different development level. Also, we study how imitation abilities of target countries interact with the tightening of IPRs. Using data for the post-TRIPS period (1995–2010), we estimate an extended gravity model to study the bilateral number of M&As, including a measure of the strength of IPRs systems on target countries and a set of control variables usually considered as determinants of M&As. The estimation results verify the gravity structure for M&As and show that IPRs –and enforcement– influence decisions of cross-border M&As in all sectors regardless of their technological content. However, IPRs are more important in countries with high imitation abilities and in sectors of high-technology content. Furthermore, a strengthening of IPRs leads to a larger increase of M&As in developing countries than in developed countries. These results call the attention on the possible implications for least developed economies and challenge the adequacy of a globally harmonized IPRs systems.     

The Effect of Cross‐Border Mergers and Acquisitions on Earnings Quality: Evidence from China

Despite the fruitful research on the motives and outcomes of cross‐border mergers and acquisitions (M&As) of Chinese multinational corporations (MNCs), there has been scant research on the impact of cross‐border M&As on corporate governance. In this article, we fill the research gap by exploring whether cross‐border M&As may lead to an improvement in corporate governance of Chinese acquirers. In particular, we examine the impact of cross‐border M&As on earnings quality of Chinese MNCs. We find that the acquisition of a target firm from a developed country leads to a significant improvement on the acquirer's earnings quality. In comparison, the acquisition of a target from an emerging market does not have such an impact. Our results are robust to various corporate governance measures, alternative econometric methods, and controls of relevant firm characteristics and macroeconomic variables. Finally, we show that the effect of cross‐border M&As on earnings quality is more pronounced in non‐state‐owned enterprises (non‐SOEs) that have conducted large M&A deals. Our article offers new insight to the international business literature on latecomer perspective and liability of foreignness. © 2016 Wiley Periodicals, Inc.     

Understanding cross‐border mergers and acquisitions of African firms: The role of dynamic capabilities in enabling competitiveness amidst contextual constraints

This article builds on existing international business literature that examines the drivers of cross‐border mergers and acquisitions (M&As) within emerging and developing economy contexts, theoretically exploring how dynamic capabilities (DCs) are connected to these drivers, and how African emerging multinational enterprises (EMNEs) can pursue them to achieve competitiveness. The article's contribution is the development of a DC framework and testable propositions for African EMNEs' cross‐border M&As. The theoretical framework shows the division of DC dimensions—sensing, seizing, and transforming—and establishes explanations for their linkage with institutional and resource drivers for African EMNEs' cross‐border M&A competitiveness. In addition, the article outlines managerial implications to this effect. Overall, the article contributes to the emerging literature on the international expansion of African EMNEs through cross‐border M&As by underscoring the role of DCs.     

Mergers and acquisitions in Latin America 1990–2014: Factorial distribution and contractionary impacts

The evolution of mergers and acquisitions (M&A) in Latin America from 1990 to 2014 is analyzed herein. A one‐sector production model without government and external sectors that links prices/costs, income distribution, demand and output is proposed, and the effects of changes in M&A on profit margins, income distribution and gross domestic product (GDP) are evaluated. The model is applied to most regional economies to determine the impact of these transactions on the profit share and level of economic activity. Our analysis does not reject the hypotheses that M&A have distributive effects favorable to profits and that they have contractionary effects on GDP in Latin American countries.     

Cross‐border M&As by Chinese firms: An analysis of strategic motives and performance

This article considers the strategic motivation and performance of Chinese cross‐border mergerand‐ acquisition (M&A) activities of 27 deals that took place in the Shanghai and Shenzhen stock markets in 2000–2004. The study finds that cross‐border M&As formation by Chinese firms are primarily motivated by market development (that is, increasing market share) to enable faster entry into new markets, promote diversification, and obtain foreign advanced technology and other resources. In terms of wealth creation, the study finds that cross‐border M&As create value for Chinese acquiring firms. © 2008 Wiley Periodicals, Inc.     

The determinants of foreign giving: An exploratory empirical investigation of US manufacturing firms

To date, there is ample evidence on the determinants of domestic charitable contributions made by US firms. However, to the best of our knowledge, no one has investigated the determinants of foreign charitable contributions made by US firms. Using the Socrates KLD database and the US M&A data for the 2004–2010 period, we find evidence that foreign giving by US manufacturing firms is linked to certain key variables. Specifically, we find evidence that variables found significant in the domestic giving literature (pre entry return on assets, size, debt to asset ratio, market to book ratio, and research and development expense as a function of sales) are also found significant for foreign giving. However, and notably, cultural distance and foreign sales percentage have been found to be important discriminators between manufacturing firms who give abroad and those who do not. It appears that high international business experience (proxied by the foreign sales ratio) and operations in culturally distant countries motivate foreign giving. Finally, subsample analysis involving developed and developing countries suggests that cultural distance matters for developing countries, but does not for the developed country subsample. Firm level profitability matters for developed countries, but not for developing countries. Future research may be expanded to include the dollar amounts of giving and a bigger sample size. Differences in foreign giving patterns between manufacturing and non-manufacturing firms, and by firms in countries other than the US, may also be explored.     

Light‐Touch Integration of Chinese Cross‐Border M&A: The Influences of Culture and Absorptive Capacity

As a major entry mode of global strategy of Chinese MNCs, Chinese cross‐border merger and acquisition (M&A) is still a less understood phenomenon, in particular the post acquisition phase. This study contributes to this rising, important and interesting phenomenon utilizing an explorative research method. By integrating synergy potential, culture influences and the learning perspective, we suggest a multilevel perspective in understanding Chinese cross‐border M&A. A novel post acquisition integration approach, namely light‐touch integration, is investigated, and supported by newly assembled empirical evidence in the context of Chinese M&A in Germany. Light‐touch integration essentially synthesizes the preservation and symbiosis integration approaches due to the contextual characteristics of Chinese cross‐border M&A, such as cultural influences and the learning perspective. Understanding the cultural and learning influences can facilitate and smooth the activities involved in the post acquisition phase. The light‐touch integration approach offers ample opportunities for joint collaborations between and mutual benefits for acquiring firms, acquired targets and third party organizations. © 2013 Wiley Periodicals, Inc.     

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.     

Mergers and acquisitions & trade: A global value chain analysis

The present paper deals with how the insertion in international trade and global value chains (GVCs) of countries affects their capacity of attracting foreign mergers and acquisitions (M&As). To this end, we combine data for bilateral M&As and trade in value added for the period 2001–15 and estimate an augmented gravity equation. Results indicate that trade openness per se does not favour M&As. Nevertheless, bilateral free trade agreements, heterogeneity of destinations (sources) for exports (imports) of intermediate and final goods, and position and participation in global value chains are relevant for explaining bilateral M&As. Moreover, their role is significantly different depending on the level of development of the home and host countries.     

Labour productivity in M&As: industry sector vs. services sector

Due to the high failure rate of the mergers and acquisitions (M&A) strategy, this study raises the questions of whether the pre-M&A performances of the acquirer and the target could predict improvement in labour productivity in the post-M&A period. The study also conducted sector analysis by comparison between three groups of the sample: the industry sector M&As, the services sector M&As and the all sectors M&As. The study uses a sample of 394 public firms from 13 countries that were involved in M&As. The study highlights the differences between the sectors. Buying a larger target in the services sector may not hinder the labour productivity in the post-M&A period, while in the industry sector, it may end in a negative influence on labour productivity. The study also shows that the labour productivity is higher in the services sector compared to the labour productivity in the industry sector, particularly during the integration stage.     

The Emergence of Contemporary Chinese Enterprise: The Heterogeneity of National Culture,Corporate Controls and Integration Approaches in M&As

This article aims to explore the emergence of the three main types of contemporary Chinese enterprises (CCEs),¹ the heterogeneity of their underlying cultures beyond Confucianism, their adopted corporate controls and their implications for mergers and acquisitions (M&As). An interdisciplinary literature review is provided to investigate the interrelated concepts between ancient Chinese wisdom, traditional Chinese culture as embedded in its national culture, and dissimilar developments in the corporate culture of CCEs. The implications for corporate controls in relation to postmerger integration approaches are also examined. Theoretical analyses and propositions are then made regarding the reinforcing cultures, adopted corporate controls and the integration approaches among the three main types of CCEs in their M&A initiatives. Through a multiple‐case study of three proposed clusters of CCEs with distinct ownership structures, this article reveals the characteristics of these respective clusters as they seek growth and development through regional and international M&As. The heterogeneity among the clusters is reflected in their variations in human capital, corporate governance, and controls, as well as the efficacy of their M&A activities. © 2013 Wiley Periodicals, Inc.     

风险投资对企业并购决策的影响及作用机制

近年来,伴随着并购市场的快速发展及股权投资退出渠道的多元化,风险投资参与的并购决策事件大幅增多。本文以我国创业板上市企业完成的并购事件为研究样本,系统研究风险投资对企业并购频次、并购支付方式及多元化并购行为等方面的影响及其作用机制。结果发现,风险投资能够通过抑制管理层过度自信进而降低并购方的频繁并购行为;得益于风险投资对并购中信息不对称的缓解,目标方接受有风险投资背景的企业以非现金方式作为并购支付对价的概率更高;此外,风险投资通过提升企业内部控制有效性,使得有风险投资背景的企业更偏好于进行同行业并购,以优化企业并购目标选择及实现企业规模效应。     

Impact of the female board members and gaps in linguistic gender marking on cross-border M&A

This research focuses on how the gender composition of a multinational board and linguistic gender marking gaps between home and host countries impact the extent of cross-border M&A activity. We argue, both theoretically and empirically, that the presence of female directors impacts cross-border M&As. Using an instrumental variable approach, we demonstrate that this effect is causal. Innovatively, we measure gaps in linguistic gender marking between home and host countries, and find that larger gaps also reduce cross-border M&As. Finally, we show that small gaps in linguistic gender marking moderate the effect of female presence in boardroom on cross-border M&As. ‎     

New Geography of M&As: A Framing Device of Firms' Strategies

The emergence of new economic centers is changing the competitive scenario. The diffusion of power across an increasingly broad range of countries has opened a window of opportunity for firms from China that want to compete globally. These firms understand their options in exploiting economic geography, and they frequently use cross‐border mergers and acquisitions (M&As) to penetrate developed countries. The United States and Europe are becoming natural destinations for such investments because of their huge markets and leading‐edge technologies. This article provides a “framing device” for firms’ strategies in a multipolar world. © 2015 Wiley Periodicals, Inc.     

The Mabey and Johnson bribery scandal: A case of executive hubris

Convicted for paying bribes to secure contracts abroad, Mabey and Johnson (M&J), a UK construction firm, made both legal and international business history. Drawing on hubris as a lens, we examine M&J's bribery scandal in Ghana and Jamaica. Through a qualitative study of court documents, witness statements, newspaper articles, and internal company emails, we unpack the bribery scheme operated by M&J executives that enabled the firm to illegitimately win major government contracts in Ghana and Jamaica. Fueled by executive hubris, M&J's practice of bribing foreign officials to secure contracts effectively insulated M&J executives from day‐to‐day realities. Over time, the firm's executives viewed themselves as infallible, exempt from established mores, invincible, and were unremorseful for their actions. Building on these findings, we develop a hubris‐bribery heuristic framework showing how individual, organizational, and institutional contexts constitutively fueled executive hubris, driving bribery at M&J. The implication for theory and practice is examined.     

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.     

Latin America's colonial legacy: The law and its relationship to economic development

This study explores the extent to which Latin America's failure to embrace a system of laws and regulations generally viewed as conducive to capital formation and the broad creation of wealth may be an important factor impairing economic development. The argument here is that the region's adherence to a legal system based on civil law is a factor contributing to Latin America's ongoing lack of economic progress. A composite measure of economic freedom served as the basis for a two‐group discriminant analysis of the civil law countries of Latin America and common law countries. The objective was to test for and explain any statistically significant between‐group differences in levels of economic freedom. © 2006 Wiley Periodicals, Inc.