Partial acquisitions in emerging markets: A test of the strategic market entry and corporate control hypotheses |
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Authors: | PengCheng Zhu Vijay Jog Isaac Otchere |
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Institution: | a Eberhardt School of Business, University of the Pacific, 3601 Pacific Ave., Stockton, CA, 95211 USAb Sprott School of Business, Carleton University, 1125 Colonel By Drive, Ottawa, Canada K1S 5B6 |
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Abstract: | In this paper, we examine the motivations of acquirers undertaking partial acquisitions in emerging markets by testing two competing hypotheses: the market for corporate control hypothesis and the market entry hypothesis. We find that targets of cross-border acquisitions outperform targets of domestic acquisitions in the pre-acquisition period. While cross-border acquisitions have no significant impact on target firms' operating performance, targets of domestic acquisitions experience significant improvements in operating performance and substantial changes in ownership structure after the acquisition. The evidence suggests that domestic partial acquisitions in emerging markets serve as a market for corporate control, while cross-border partial acquisitions are motivated by the strategic market entry rationale. |
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Keywords: | G34 |
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