Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms
University of New South Wales (UNSW) - Australian School of Business; Financial Research Network (FIRN)
University of Amsterdam - University of Amsterdam Business School; Tinbergen Institute
University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN)
August 1, 2013
UNSW Australian School of Business Research Paper No. 2012 BFIN 10
2013 Financial Markets & Corporate Governance Conference
25th Australasian Finance and Banking Conference 2012
We study the role of private equity firms in cross-border M&A. Private equity-backed firms are more likely to become targets in cross-border transactions. On average, cross-border deals with private equity-involvement are not associated with higher acquirer announcement returns. However, announcement returns are higher if the acquirer is backed by a private equity firm and the target is from a country with poor corporate governance. We document that the international networks of private equity firms can explain why they create value in such deals. Our findings suggest that private equity firms help to reduce information asymmetries in cross-border M&A deals.
Number of Pages in PDF File: 66
Keywords: Mergers and acquisitions, private equity, information asymmetries
JEL Classification: G34, G32, G24working papers series
Date posted: February 25, 2012 ; Last revised: August 14, 2013
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