In recent years, increasing international merger and acquisition activity has captured the attention of not only the business press but also of academia and policymakers. The effects of this 'mergermania' are felt by many (i.e. managers, stockholders, regulators, and consumers), and the dollar amounts are significant. However, little has been done to find out the financial characteristics of the US and foreign firms participating in the cross-border merger and acquisition activity. The main objective of this study is to gain a better understanding of the characteristics of firms involved in the international market for corporate control. To meet this objective, the firm-specific financial variables of both foreign companies and US companies have been investigated and the effect that these variables have on the probability of a successful acquisition has been assessed. In addition, despite the fact that foreign acquisitions of US firms have outnumbered US acquisitions overseas, it is thought relevant to look into the financial characteristics of US companies acquiring foreign companies. This gives a more complete picture of the cross-border takeover phenomenon. Under the assumption that the goal of corporate managers is the maximization of shareholders' wealth, analysis is conducted within the neoclassical theoretical framework of maximization of the value of the firm. If the acquisition of a US company is a project with a net present value (NPV) larger than zero, then there is an increase in the shareholders' wealth of the acquiring company. Thus, financial variables were chosen on the basis of their hypothesized effect on value using the NPV criterion. It was found that six out the eight financial variables studied affect the NPV measure in the predicted direction.

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