Abstract

http://ssrn.com/abstract=1571560
 
 

References (87)



 
 

Citations (12)



 


 



What is Different About Government-Controlled Acquirers in Cross-Border Deals?


Chuan Rose Liao


Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

George Andrew Karolyi


Cornell University - Johnson Graduate School of Management

September 2009

AFA 2011 Denver Meetings Paper

Abstract:     
We examine the motives for and consequences of 5,317 failed and completed cross-border acquisitions constituting $619 billion of total activity that were led by government-controlled acquirers over the period from 1990 to 2008. We benchmark this activity at the aggregate country level and also at the deal level with cross-border acquisitions involving corporate acquirers over the same period. We find that government-led deal activity is relatively more intense for geographically-closer countries, but also relatively less sensitive to differences in the level of economic development of the acquirer’s and target’s home countries, in the quality of their legal institutions and accounting standards, and to how stringent are restrictions on FDI flows in their countries. Government-led acquirers are more likely to pursue larger targets with greater growth opportunities and more financial constraints. But, the share-price reactions to the announcements of such acquisitions are not different. Among those deals involving government-controlled acquirers, we do find important differences involving sovereign wealth funds (SWFs). SWF-led acquisitions are less likely to fail, they are more likely to pursue acquirers that are larger in total assets and with fewer financial constraints, and the market reactions to SWF-led acquisitions, while positive, are statistically and economically much smaller. We discuss policy implications in terms of recent regulatory changes in the U.S. and other countries that seek to restrict foreign acquisitions by government-controlled entities.

Number of Pages in PDF File: 56

Keywords: Cross-border acquisitions, sovereign acquirers

JEL Classification: F3, G15, G32, G38

working papers series


Download This Paper

Date posted: March 17, 2010  

Suggested Citation

Liao, Chuan Rose and Karolyi, George Andrew, What is Different About Government-Controlled Acquirers in Cross-Border Deals? (September 2009). AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1571560 or http://dx.doi.org/10.2139/ssrn.1571560

Contact Information

Chuan Rose Liao
Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )
Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States
George Andrew Karolyi (Contact Author)
Cornell University - Johnson Graduate School of Management ( email )
Ithaca, NY 14853
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,509
Downloads: 299
Download Rank: 54,771
References:  87
Citations:  12

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.407 seconds