Abstract

http://ssrn.com/abstract=1480831
 
 

References (41)



 


 



Location, Proximity, and M&A Transactions


Ye Cai


Santa Clara University - Leavey School of Business

Xuan Tian


Indiana University - Kelley School of Business - Department of Finance

Han Xia


University of Texas at Dallas - Naveen Jindal School of Management

August 18, 2015

Journal of Economics & Management Strategy, Forthcoming

Abstract:     
In this paper, we examine how the geographic location of firms affects acquisition decisions and value creation for acquirers in takeover transactions. We find that firms located in an urban area are more likely to receive a takeover bid and complete a takeover transaction as a target compared with firms located in rural areas, and takeover deals involving an urban target are associated with higher acquirer announcement returns, after controlling for the proximity between the target and the acquirer. In addition, a target’s urban location significantly attenuates the negative effect of a long distance between the target and the acquirer on acquirer returns, a fact that is documented in the existing literature. Our findings reveal a previously underexplored force—firm location—that can affect takeover transactions, in addition to proximity. Our paper suggests that a firm’s location plays an important role in facilitating the dissemination of soft information and enhancing information-based synergies.

Number of Pages in PDF File: 47

Keywords: geographic location, proximity, takeover exposures, acquirer announcement returns, soft information

JEL Classification: G14, G30, G34


Open PDF in Browser Download This Paper

Date posted: October 1, 2009 ; Last revised: August 25, 2015

Suggested Citation

Cai, Ye and Tian, Xuan and Xia, Han, Location, Proximity, and M&A Transactions (August 18, 2015). Journal of Economics & Management Strategy, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1480831 or http://dx.doi.org/10.2139/ssrn.1480831

Contact Information

Ye Cai
Santa Clara University - Leavey School of Business ( email )
500 El Camino Real
Santa Clara, CA California 95053
United States
Xuan Tian (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. Tenth Street
Bloomington, IN 47405
United States
812-8553420 (Phone)
824-8555875 (Fax)
HOME PAGE: http://kelley.iu.edu/tianx

Han Xia
University of Texas at Dallas - Naveen Jindal School of Management ( email )
P.O. Box 830688
Richardson, TX 75083-0688
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,162
Downloads: 415
Download Rank: 44,149
References:  41

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.375 seconds