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)
July 17, 2016
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’ experience and networks that result from prior deals in target countries. 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: July 18, 2016
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