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Deal structure decision in the global market for divested assets

Deal structure decision in the global market for divested assets
Deal structure decision in the global market for divested assets
We find that the deal structure decision to engage in a foreign asset purchase instead of acquiring a foreign target's equity is more likely when bidders are smaller, the bidder's proportion of foreign sales-to-total sales is higher and the target is in an unrelated industry. In addition, bidders tend to execute asset purchase transactions rather than acquiring a foreign target's equity when the target's corresponding country has a relatively favorable rating for rule of law, control of corruption, political stability and absence of violence, regulatory quality and economic freedom. We also find that bidders engaging in asset purchase transactions experience significantly more favorable valuation effects than those that acquire the equity of target firms
1057-5219
104-116
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
Ngo, Thanh N.
54ed0c1a-89c8-4cc0-a5fe-8a4b91490265
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Madura, Jeff
d0a58acb-8d61-4120-b6d6-e091c1daf6c4
Ngo, Thanh N.
54ed0c1a-89c8-4cc0-a5fe-8a4b91490265

Jory, Surendranath, Madura, Jeff and Ngo, Thanh N. (2012) Deal structure decision in the global market for divested assets. International Review of Financial Analysis, 24, 104-116. (doi:10.1016/j.irfa.2012.08.008).

Record type: Article

Abstract

We find that the deal structure decision to engage in a foreign asset purchase instead of acquiring a foreign target's equity is more likely when bidders are smaller, the bidder's proportion of foreign sales-to-total sales is higher and the target is in an unrelated industry. In addition, bidders tend to execute asset purchase transactions rather than acquiring a foreign target's equity when the target's corresponding country has a relatively favorable rating for rule of law, control of corruption, political stability and absence of violence, regulatory quality and economic freedom. We also find that bidders engaging in asset purchase transactions experience significantly more favorable valuation effects than those that acquire the equity of target firms

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Published date: September 2012
Organisations: Southampton Business School

Identifiers

Local EPrints ID: 394276
URI: http://eprints.soton.ac.uk/id/eprint/394276
ISSN: 1057-5219
PURE UUID: 0c5c92b5-45eb-49b2-b491-a2188a425b25
ORCID for Surendranath Jory: ORCID iD orcid.org/0000-0002-8265-0001

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Date deposited: 12 May 2016 13:32
Last modified: 21 Aug 2019 00:32

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