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)
January 29, 2014
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 (PE) firms in facilitating cross-border M&A. We find that PE-backed firms are more likely to become targets in cross-border transactions. Cross-border deals are associated with higher acquirer announcement returns if the acquirer is PE-backed and the target located in a poor governance environment. We document that the international networks of PE firms can explain why they create value in such deals. We take various steps to mitigate endogeneity and sample selection concerns. Our findings suggest that PE firms can help to reduce information asymmetries in cross-border M&A deals.
Number of Pages in PDF File: 49
Keywords: Mergers and acquisitions, private equity, information asymmetries
JEL Classification: G34, G32, G24
Date posted: February 25, 2012 ; Last revised: January 29, 2014
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