Purpose – The purpose of this paper is to adopt a multi-level approach to investigate what factors shape the content of emerging market firms’ foreign market entry decisions, particularly the ownership participation in cross-border mergers and acquisitions (MA and uses a standard event study methodology to assess the market reaction of a particular cross-border M&A deal. Findings – The author finds that a country-level factor (institutional distance), an industry-level factor (industry unrelatedness) and a firm-level factor (board concentration) have significant impact on ownership participation in cross-...

Ownership participation of cross-border mergers and acquisitions by emerging market firms: Antecedents and performance

Researchers have long tried to define the impact of corporate mergers and acquisitions on company performance. We contribute to the existing literature by examining the performance of M&A deals in emerging capital markets based on the economic profit model and comparing the results with ones obtained by means of traditional method—accounting studies. Examining a sample of 80 deals initiated by companies from emerging capital markets over 2003–2009, we find that M&As are value-destroying deals for the combined firms. Results from the long-run analysis prove the negative industry-adjusted differences between post-acquisition and pre-acquisition performance measures. The difference is equal to a significant $$-3.3$$
  % for the EBITDA/sales ratio. The economic profit approach demonstrates a similar result. Economic profit has declined due to M&A deals by $4 million. We also analyze the determinants of M&A performance, such as method of payment, business similarity, and type of geographical expansion (cross-border versus local deals).

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The performance of mergers and acquisitions in emerging capital markets: new angle

Institutional distance and cross-border M&A performance: A dynamic perspective

Rule of law or country level corporate governance: What matters more in emerging market acquisitions?

The intent of the research paper has been to evaluate the short-term performance in terms of abnormal returns to the announcement of cross-border acquisitions (CBAs). This research work is based on 139 acquisitions undertaken by Indian companies during 2012–2016. The event study methodology has been applied to assess the effect of acquisition announcement on the short-run performance of the bidding firm. Later on, adopting the conceptual framework of organizational learning and absorptive capacity of the organization, a disaggregative analysis has been conducted to ascertain the factors affecting short-run performance. The results indicate that on an average, CBAs have statistically significant and positive valuation effects for the Indian bidders in the short-run. Further, a disaggregative analysis shows that previous CBA experience and horizontal acquisitions have positive and significant valuation effects for the acquirers. Similarly, the age of the acquirer has been observed to exert a favorable influence on its own valuation post-acquisition. However, smaller firms vis-a-vis mid- and large-sized firms generate more abnormal returns. The paper attempts to extend the application of organizational learning theory and absorptive capacity to the field of corporate mergers and acquisitions by analyzing the equity market response to the public announcement of cross-border acquisitions and antecedents of such response.

Impact of Organizational Learning and Absorptive Capacity on the Abnormal Returns of Acquirers: Evidence from Cross-Border Acquisitions by Indian Companies

Purpose – The purpose of this paper is to contribute to M&A literature by explicitly investigating whether cross-border acquisitions involving emerging markets, either as acquirers or as targets, create value and how is the performance outcome in such acquisitions impacted by deal-specific characteristics. Design/methodology/approach – This study uses industry-adjusted operating performance to measure acquisition gains, the Wilcoxon signed rank test to examine value creation potential and OLS regression to evaluate the impact of deal characteristics on acquisition gains. Findings – The authors find very pronounced value destruction when emerging market firms acquire targets in developed markets, the adverse outcome being further aggravated when the mode of acquisition is “tender offer” rather than a “negotiated deal”. On the other hand, when developed market firms acquire targets from emerging markets, there is an even chance of value creation, the outcome being favourably influenced by the pre-acquisitio...

P.C. Narayan

Papers

Do cross-border acquisitions involving emerging market firms create value: Impact of deal characteristics