Year of Graduation
Impact of Institutional and Economic Distances on the Performance of Cross-Border M&A Deals: Evidence from Emerging Market Acquirers
Strategic Corporate Finance
This research is devoted to the outlining the influence of countries differences on the efficiency of M&A deals initiated by the sellers from emerging markets during 2000-2016. The focus of the work is lying in detecting the significant impact of country specific factors on M&A deal efficiency and in analysis of key firm-level determinants that may help to ease the possible negative effect. The evaluation of the impact of institutional and economic differences between acquirer's and investors' countries on the seller's short term abnormal return shows that both distances have a positive impact on deal efficiency if the target-company is from more developed country, while acquisition of the target-company from less developed market leads to the acquirer's value destruction. In contrast to existing studies, this research also investigates the drivers that may help to decrease the negative impact of the distances: size of the company, previous experience of participating in M&A deals, experience of running international business and the fact, that the target-company is from high-tech industry. Based on the obtained results, we conclude that all four studied factors help to alleviate the negative influence of both economic and institutional differences on M&A deal efficiency.