The impact of country-dyadic military conflicts on market reaction to cross-border acquisitions

Li, Chengguang; Arikan, Ilgaz; Shenkar, Oded; Arikan, Asli M.

doi:10.1057/s41267-019-00268-y

Cited by 54 publications

(52 citation statements)

References 141 publications

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“…Subsidiary performance Home and host country-level political and institutional variables have been shown to influence subsidiary performance, and recent studies highlight the dyadic political relationship between countries as driver of investment decisions and performance (Li, Arikan, Shenkar, & Arikan, 2019). Yet, we still lack understanding of how disruptive change in the variables can affect subsidiary-level outcomes.…”

Section: Organizational Practicesmentioning

confidence: 99%

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

2020

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Multinational enterprise (MNE) subsidiaries abroad are important organizations in their own rights. They typically hold some of the MNE's most critical resources, and operate at the forefront of complex international environments. In this review, we identify and organize theoretical and empirical research on subsidiary management based on over 600 articles in leading academic journals. We develop a conceptual framework that integrates complementary streams of theoretical and empirical research with the subsidiary as its focal unit of analysis. In particular, we review six lines of research on subsidiary scope, practices, knowledge management, engagement with local market and nonmarket actors, performance, and individuals within subsidiaries. We highlight theoretical perspectives that have contributed to, and been advanced by, research on MNE subsidiaries. Based on the review, we explore future research agendas, linking the contemporary research themes with two main thrusts. First, subsidiary management is a multi-level phenomenon that would benefit from more microfoundational research. Second, subsidiary management operates at key interfaces of technology paradigm shifts, and of disruptions in the political and institutional environment. Research into the dynamics of subsidiary management would thus enhance our understanding of international business in a volatile global economy. Journal of International Business Studies (2020) 51, 538-576.

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Section: Organizational Practicesmentioning

confidence: 99%

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

2020

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“…Second, we advance social identity theory (Tajfel and Turner, 1986) and, more specifically, its application in M&A research (Hogg and Terry, 2000). Previous acquisition research has typically used the theory to examine the social identities of the individual members of the merging firms, whether and how they identify with the post‐merger entity, and the resulting intergroup dynamics and relations between members of the previously autonomous organizations (e.g., Ashforth and Mael, 1989; Hogg and Terry, 2000; Li et al, 2020). Our study expands previous research by incorporating a different perspective on social identity and demonstrates that the classification of firms by their nationalities significantly shapes how investors evaluate M&As.…”

Section: Discussionmentioning

confidence: 99%

“…Extant management research suggests that social identity processes play a pronounced role in organizations and business activities, including, for example, organizational socialization and M&As (e.g., Ashforth and Mael, 1989; Hogg and Terry, 2000). In the context of international business activities, such as international joint ventures (Salk and Shenkar, 2001) and international acquisitions (Li et al, 2020), national identity has been found to play a particularly profound role, i.e., individuals and, by extension, organizations are increasingly classified and evaluated based on their nationality. Given the salience of nationality as a category to classify organizations in cross‐border activities (Salk and Shenkar, 2001), we expect the qualities of a country to affect how its organizations are perceived.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…International acquisitions have steadily gained in importance over the past decades, offering acquirers alluring promises of rapid entry into foreign markets, acquisition of scarce resources beyond their national borders, and diversification of risks across different countries, among many other opportunities (Mulherin et al, 2017; Ravenscraft and Scherer, 2011). Ultimately, firms intend to create value through acquisitions (Li et al, 2020). Value creation for public firms is determined by the assessment of the market, whose reaction to acquisition announcements is amongst the most widely used performance proxies in strategy and finance research (Masulis et al, 2007).…”

Section: Introductionmentioning

confidence: 99%

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How Country Reputation Differentials Influence Market Reaction to International Acquisitions

Shenkar

Newburry

et al. 2021

J Management Studies

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This study investigates the influence of country reputation differentials on market reaction to international acquisitions. Building on social identity theory, we argue that market reactions are more positive when the reputation of the acquirer’s country is better than that of the target’s, since a country’s reputation imprints on its firms due to social categorization. Thus, firms from countries with better reputations are perceived as having superior skills/capabilities and the reputation difference suggests that the acquirer is able to identify/exploit undervalued targets and leverage synergies. The influence of country reputation should be weaker when additional information on the merging firms is present, through news media reporting and analyst coverage of the merging firms as well as the acquirer’s prior acquisition track record, since market investors will rely less on country reputation. We find support for our hypotheses for a sample of 4,792 international acquisitions across 48 countries from 2009 to 2017.

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“…That is, where only one branch of government holds all power, political constraint is very low, whereas where power is distributed widely, political constraint is very high. We also include the country's market capitalization over GDP and GDP growth rate, which are proxies for the country's financial market and economic development, respectively (Li, Arikan, Shenkar, & Arikan, 2020). We collected data on both measures from World Bank's World Development Indicators (WDI).…”

Section: Control Variablesmentioning

confidence: 99%

The Influence of Nation-Level Institutions on Acquisition Premiums: A Cross-Country Comparative Study

Haleblian

2021

Journal of Management

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We build on neo-institutional theory to examine the manner in which nation-level institutions systematically affect domestic acquisitions—that is, acquisitions involving acquirers and targets from the same country. Specifically, we study in what way premiums are influenced through a set of cognitive, normative, and regulatory forces. In terms of cognitive pressures, we theorize that prior premium decisions of industry peers in the same country influence focal acquisition premiums, since prior premium decisions serve as reference frames for firms. In addition, we posit that normative forces in the form of the national cultural values of uncertainty avoidance, future orientation, and in-group collectivism affect bid premiums, as these factors influence the manner in which firms deal with the uncertainty, payoff time, and merger of groups inherent to acquisitions. Furthermore, we propose that a country’s regulatory pressures through its disclosure requirements influence premiums, since they reduce information asymmetries and affect a firm’s confidence in assessing its potential gains from acquisitions. Using a sample of domestic acquisitions, we find support for several of the hypotheses. Our work offers a cross-country comparative study of how nation-level institutions affect domestic bid premiums and makes theoretical contributions to acquisition premium research and institutional theory.

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The impact of country-dyadic military conflicts on market reaction to cross-border acquisitions

Cited by 54 publications

References 141 publications

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

How Country Reputation Differentials Influence Market Reaction to International Acquisitions

The Influence of Nation-Level Institutions on Acquisition Premiums: A Cross-Country Comparative Study

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