The Impact of Cross-Country Differences on CBM&A Performance: Evidence From Emerging Capital Markets Acquirers

Internationalization and close cooperation of the world production and trade process does not leave aside emerging markets, which proportion of participation in cross-border M&A deals continues to grow. Most studies devoted to the research of standard determinants, while there is not enough attention paid to effect of cross-country differences, which are a key differentiator between cross-border and domestic M&A, especially in the aspect of the M&A initiated by companies from emerging markets. The aim of this study is to identify the impact of cross-country differences on the effectiveness of cross-border mergers and acquisitions for the acquirers from emerging countries. As a result of the empirical research on the combined sample of 239 cross-border M&A initiated by companies from the BRICS countries during the period 2000-2016, it was found that the cross-border M&A deals lead to the value creation for the acquirers from emerging markets, also there is a positive impact of cultural differences on the effectiveness of cross-border M&A deals. In addition, analysis of subsample for each of the countries identified the impact of the relatedness of target's country to the economic developed, cultural differences and differences in economic development between the countries of the target and acquirer on the performance of cross-border mergers and acquisitions at least for the subsamples of the two countries. The influence of the formal institutional differences on the success of cross-border M&A deals was not found for any of the countries.