Corporate multinationality and acquirer returns
Corporate multinationality and acquirer returns
This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and thereby, require superior managerial capabilities to succeed.
Corporate multinationality, Firm capabilities, Geographic diversification, M&As, Multinational corporations, UK
230-267
Agyei-Boapeah, Henry
37005f29-d453-458e-b6b5-cd92e55587a4
Fosu, Samuel
20135acd-447a-44ab-b5c7-949477e89121
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
29 June 2020
Agyei-Boapeah, Henry
37005f29-d453-458e-b6b5-cd92e55587a4
Fosu, Samuel
20135acd-447a-44ab-b5c7-949477e89121
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Agyei-Boapeah, Henry, Fosu, Samuel and Ntim, Collins
(2020)
Corporate multinationality and acquirer returns.
Abacus, 56 (2), .
(doi:10.1111/abac.12146).
Abstract
This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and thereby, require superior managerial capabilities to succeed.
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Accepted/In Press date: 4 October 2018
e-pub ahead of print date: 8 January 2019
Published date: 29 June 2020
Keywords:
Corporate multinationality, Firm capabilities, Geographic diversification, M&As, Multinational corporations, UK
Identifiers
Local EPrints ID: 424926
URI: http://eprints.soton.ac.uk/id/eprint/424926
ISSN: 0001-3072
PURE UUID: e9905099-1c8f-4c6d-b5a1-70cd539b8bc4
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Date deposited: 05 Oct 2018 16:30
Last modified: 16 Mar 2024 07:08
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Author:
Samuel Fosu
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