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Ownership in cross-border acquisitions and entry timing of the target firm
Institution:1. INSEAD, Boulevard de Constance, 77305, Fontainebleau Cedex, France;2. City University of Hong Kong, Hong Kong;3. Faculty of Management, University of New Brunswick, Fredericton, NB, E3B 5A3, Canada;1. Faculty of Business Administration, University of Macau, Avenida Padre Tomás Pereira, Taipa, Macau;2. School of Marketing & International Business, Victoria University of Wellington, 23 Lambton Quay, Pipitea Campus, PO Box 600, Wellington 6140, New Zealand;1. Durham University Business School, Mill Hill Lane, Durham, DH1 3LB, United Kingdom;2. School of Communication and Culture, Royal Roads University, 2005 Sooke Road, Victoria, BC, V9B 5Y2, Canada;3. School of Art and Media, Beijing Normal University, 19 Xinjiekou Outer Street, Bei Tai Ping Zhuang, Haidian, Beijing, 100875, China;1. Faculty of Business and Law, The University of Northampton, Northampton, NN2, 7AL, UK;2. School of Management, Royal Holloway, University of London, Egham, Surrey, TW20 0EX, UK;1. Nottingham University Business School China, 199 Taikang East Road, Ningbo, 315100, China;2. Aalto University, P.O. Box 21210, FI-00076 Aalto, Finland;3. Chinese University of Hong Kong, Hong Kong;4. Uppsala University, Box 513, 75120 Uppsala, Sweden;1. National Research Base of Intelligent Manufacturing Service, Chongqing Technology & Business University, Chongqing 400067, China;2. Haub School of Business, Saint Joseph’s University, Philadelphia, PA 19131, USA
Abstract:We examine how the entry timing of targets influences the initial and the post-entry percentage of ownership acquired by multinationals. We argue that targets that have entered earlier into the market launch signals of lower uncertainty in contexts where first-mover advantages exist. As a consequence, multinationals are willing to buy higher levels of ownership in these early entrant targets and to increase their participation in the subsidiary equity in the post-entry stage. Finding support for these relationships, we study how market age and innovative behaviour of the target reduce the importance of leading time as determinant of the ownership decision.
Keywords:Cross-border acquisitions  Initial ownership  Ownership variation  Leading time  First-mover advantages  Market age  Technological change
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