Acquisition Behavior of Emerging Versus Developed Market Multinationals

Abstract

The purpose of this paper is to investigate how emerging and developed market multinationals (EMMs and DMMs) differ in their acquisition behavior (vis-à-vis the choice of partial versus full acquisitions) when entering a developed market economy, Japan. We hypothesize that EMMs prefer partial acquisitions, whereas DMMs prefer full acquisitions due to what we call the country-of-origin effect. Additionally, we hypothesize that this country-of-origin effect is more pronounced for smaller firms. The results, based upon 224 strategic cross-border acquisitions in Japan, support these two hypotheses. This study contributes to the literature on EMMs.

Board size and acquisition outcome: The moderating role of home country formal institutional development

“…Eighth, I included a dummy variable of cash payment to control for its influence on the dependent variable (Fuad & Gaur, ). Ninth, at the industry level, I controlled for horizontal relatedness between the acquirer and target by including a dummy variable that took the value of 1 if the acquirer and target belonged to the same third‐level industry classification as per Bloomberg Industry Classification System and 0 otherwise (Ahmed & Bebenroth, ). Tenth, I controlled for the possible influence of host country formal institutional development (variable identifier: host institutions ).…”

“…I operationalized this variable in the same way as home country formal institutional development. Additionally, I included industry dummies as per Bloomberg Industry Classification System first‐level classification to control for industry fixed effects (Ahmed & Bebenroth, ).…”

“…Definitions and references of the variables are presented in Table 1. Public target A dummy variable that took the value of 1 for publicly listed targets and 0 otherwise (Li et al, 2019) Percent sought The percentage sought by the acquirer in the focal transaction (Fuad & Gaur, 2019) Cash payment A dummy variable that took the value of 1 if the mode of payment was cash and 0 otherwise (Fuad & Gaur, 2019) Horizontal relatedness A dummy variable that took the value of 1 if the acquirer and target belonged to the same third-level industry classification as per BISC and 0 otherwise (Ahmed & Bebenroth, 2019) Host country formal institutional development (variable identifier: host institutions)…”

Individual Investments Biased by the Size of a Foreign Investor: An Experimental Study

“…On the other hand, foreign investments that occupy at least 10% shares of the local firm are categorized as foreign direct investment (FDI). Foreign investors undertaking FDI can partially or completely influence the managerial decisions of the local firms (Ahmed & Bebenroth, 2019). The international business literature further classifies FDI into investments with minority control (10%-50% ownership) and ma-1 Disposition effect: Individual investors sell appreciating investments prematurely while delay loss-making investments (Fogel & Berry, 2006).…”

Risk Perception in the Internationalization of Brazilian Companies: An Analysis in Different Entry Modes

“…The international business scenario, especially regarding the last two decades, saw the growing expansion of companies from emerging countries operating abroad (Ahmed & Bebenroth, 2019). These are companies with little tradition of operations outside their countries of origin and known as late movers since, in countries with higher economic development, more intense engagement movements for internationalization were made already in the middle of the 20th century (Cuervo-Cazurra et al, 2019).…”