Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms
UNSW Business School; Financial Research Network (FIRN)
Frankfurt School of Finance & Management gemeinnützige GmbH
UNSW Australia Business School, School of Banking and Finance; Financial Research Network (FIRN)
October 17, 2015
25th Australasian Finance and Banking Conference 2012
2013 Financial Markets & Corporate Governance Conference
UNSW Australian School of Business Research Paper No. 2012 BFIN 10
We show that it is a signal of deal quality in cross-border M&A if acquirers have private equity firms as owners (“PE backing”). As such, announcements of cross-border M&A deals by PE-backed acquirers are associated with positive stock price reactions, but only if targets are in poor information environments. We show that PE backing is a positive market signal because of PE firms’ cross-border deal experience and networks. We close by documenting that the market correctly anticipates that operating performance of PE-backed acquirers increases as a result of cross-border M&A.
Number of Pages in PDF File: 31
Keywords: Mergers and acquisitions, private equity, information asymmetries
JEL Classification: G34, G32, G24
Date posted: February 25, 2012 ; Last revised: April 22, 2016
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