Value creation and destruction in cross-border acquisitions : an empirical analysis of foreign acquisitions of U.S. firms
By: SETH, Anju
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Contributor(s): SONG, Kean P | PETTIT, R. Richardson.
Material type: 
ArticlePublisher: 2002Subject(s): International acquisitions | Cross border | Compra | Value Creation | Value Destruction | Managerial MotivesStrategic Management Journal 23, 10, p. 921-940Abstract: We conduct as investigation of the sources of gains and losses in cross-border acquisitions in light of different motives for undertaking these transactions: synergy-seeking, managerialism and hubris; We find that the data are consistent with the expectation that multiple sources of value creation exist in synergistic cross-border acquisitions: asset sharing, reverse internalization of valuable intangible assets, and financial diversification. Gains accrue to bidder firm shareholders only for the least fungible of these sources of gains, i.e., reverse internaliztion. For value-des troying acquisitions that are expected to be driven by managerialism, we find that the data are consistent with only one of the sources of value destruction that we examine, i.e., risk reduction. In these acquisitions, the evidence also suggests that the relative size of the target to the bidder mitigates the negative effects of risk reduction. Our results underscore the importance of considering the implications of alternative behavioral assumptions in empirical strategy content research
| Item type | Current location | Collection | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Periódico | Biblioteca Graciliano Ramos | Periódico | Not for loan |
We conduct as investigation of the sources of gains and losses in cross-border acquisitions in light of different motives for undertaking these transactions: synergy-seeking, managerialism and hubris; We find that the data are consistent with the expectation that multiple sources of value creation exist in synergistic cross-border acquisitions: asset sharing, reverse internalization of valuable intangible assets, and financial diversification. Gains accrue to bidder firm shareholders only for the least fungible of these sources of gains, i.e., reverse internaliztion. For value-des troying acquisitions that are expected to be driven by managerialism, we find that the data are consistent with only one of the sources of value destruction that we examine, i.e., risk reduction. In these acquisitions, the evidence also suggests that the relative size of the target to the bidder mitigates the negative effects of risk reduction. Our results underscore the importance of considering the implications of alternative behavioral assumptions in empirical strategy content research
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