The legal environment and corporate valuation: Evidence from cross-border takeovers |
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| Authors: | David R Kuipers Darius P Miller Ajay Patel |
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| Institution: | aBloch School of Business, University of Missouri-Kansas City, Kansas City, MO 64110, USA;bCox School of Business, Southern Methodist University, Dallas, TX 75275, USA;cBabcock Graduate School of Management, Wake Forest University, Winston-Salem, NC 27109, USA |
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| Abstract: | We examine the cumulative abnormal returns to U.S. targets, their foreign acquirers, and the target-acquirer portfolio in 181 successful cross-border tender offers during the period 1982–1991. We find that the incentive mechanisms created by the degree of shareholder-creditor rights protection and legal enforcement in the acquiring firm country can explain the observed variation in target, acquirer, and portfolio returns. We also find that foreign acquirers overpay for Delaware-incorporated targets. Our results are strengthened after controlling for deal-related effects addressed in the domestic mergers and cross-border investments literature. |
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| Keywords: | Corporate governance Regulation International asset pricing Tender offers State of incorporation |
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