Is the grass on the other side greener? Testing the cross-border effect for U.S. acquirers

Meng, Yun; Sutton, Ninon K.

doi:10.1007/s11156-016-0573-1

Cited by 6 publications

(4 citation statements)

References 38 publications

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“…Next, we attempt to see if there is a detectable difference in learning via serial acquisitions of targets from the competitive merger markets of the United States, United Kingdom and Canada, instead of targets from the rest of the world. Prior literature (e.g., Alexandridis et al., 2010; Meng & Sutton, 2017) has documented a difference in premiums paid and realized gains to targets from these countries versus the rest. Table 10 (Panel A) appears to indicate that there may not be much difference between the two groups when it comes to acquisitions of public targets.…”

Section: Resultsmentioning

confidence: 96%

“…Prior research suggests that acquirers fare worse in the most competitive M&A markets of the United States, United Kingdom and Canada, where they are forced to pay larger premiums for their targets (e.g., Alexandridis et al., 2010; Meng & Sutton, 2017). These markets all operate under the English common law legal system, which provides the strongest shareholder and creditor protection compared to any other legal system (La Porta et al., 2000).…”

Section: Resultsmentioning

confidence: 99%

“…For example, international mergers may provide better investment opportunities for acquirers, who can choose from a wider selection of diverse targets, which in turn may lead to higher synergy and efficiency gains (Moeller & Schlingemann, 2005). Foreign takeovers could also benefit acquirers from competitive takeover markets (i.e., United States, United Kingdom, and Canada) by providing potentially valuable, but less expensive, target firms in less competitive takeover markets (see Alexandridis et al., 2010; Meng & Sutton, 2017). At the same time, learning may be more difficult in cross‐border acquisitions, given the potential diversity of targets and the potentially severe information asymmetry in foreign takeovers.…”

Section: Multiple Acquisitions and Learningmentioning

confidence: 99%

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Learning in serial mergers: Evidence from a global sample

Pandey

Sutton

Steigner

2021

Business Fin & Account

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Do frequent acquirers learn from their experience in serial mergers? A recent stream of literature has proposed that the generally observed declining investor response (cumulative abnormal returns) to successive acquisitions by frequent acquirers may be evidence of learning, rather than the result of commonly attributed causes such as managerial hubris or empire building. We examine the learning hypothesis on a global scale, using a sample of 13,326 publicly listed acquiring firms representing 72 nations conducting 27,305 acquisitions over the period 1984–2014. Our results provide evidence of institutional‐based differences in acquirer learning on a global scale in the valuation of private targets. In contrast, we find evidence of hubris in takeovers of public targets, especially in the United States, and other competitive takeover markets, where acquirers experience persistent, significant losses over successive acquisitions, while targets continue to reap significant gains throughout the acquisition sequence.

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Section: Resultsmentioning

confidence: 96%

Section: Resultsmentioning

confidence: 99%

Section: Multiple Acquisitions and Learningmentioning

confidence: 99%

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Learning in serial mergers: Evidence from a global sample

Pandey

Sutton

Steigner

2021

Business Fin & Account

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“…Moeller and Schlingemann (2005) show that US acquires enjoy higher gains from domestic deals rather than foreign target ones. However,Meng and Sutton (2016) show that the listing status of the target drives the cross-border effect in two opposite directions: acquirers of private targets fare worse in CBAs, while acquirers of public targets experience significantly higher gains in acquisitions of foreign targets Barbopoulos et al (2012). show that UK bidders' gains from domestic vs. foreign target deals are not significantly different.…”

mentioning

confidence: 90%

Relative equity market valuation conditions and acquirers’ gains

Andriosopoulos¹,

Barbopoulos

2016

Rev Quant Finan Acc

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We examine whether the relative equity market valuation conditions (EMVCs) in the countries of merging firms help acquirers' managers to time the announcements of both domestic and foreign targets. After controlling for several deal-and merging firmspecific features we find that the number of acquisitions and acquirers' gains are higher during periods of high-EMVCs at home, irrespective of the domicile of the target. We also find that the higher gains of foreign target acquisitions realized during periods of high-EMVCs at home stem from acquiring targets based in the RoW (=World-G7), rather than the G6 (=G7-UK) group of countries. We argue that this is due to the low correlation of EMVCs between the UK (home) and the RoW group of countries. However, these gains disappear or even reverse during the post-announcement period. Moreover, acquisitions of targets domiciled in the RoW (G6) countries yield higher (lower) gains than acquisitions of domestic targets during periods of high-EMVCs at home. This suggests that the relative EMVCs between the merging firms' countries allow acquirers' managers to time the market and acquire targets at a discount, particularly in countries in which acquirers' stocks are likely to be more overvalued than the targets' stocks.

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Toward a complete definition of relatedness in merger and acquisition transactions

Alhenawi

Stilwell

2018

Rev Quant Finan Acc

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Is the grass on the other side greener? Testing the cross-border effect for U.S. acquirers

Cited by 6 publications

References 38 publications

Learning in serial mergers: Evidence from a global sample

Learning in serial mergers: Evidence from a global sample

Relative equity market valuation conditions and acquirers’ gains

Toward a complete definition of relatedness in merger and acquisition transactions

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