International Deal Experience and Cross-Border Mergers
January 20, 2014
This paper shows that a director's cross-border deal experience, gained during prior service on another firm's board, has a large positive impact on the decision to conduct a first cross-border merger and on the choice of target country. A cross-border merger announced by a firm without a cross-border merger record is less likely to fail and is received more favorably by financial markets when it is exposed to cross-border deal experience through the board of directors. These impacts are amplified for acquisitions of targets headquartered in unfamiliar countries but significantly muted when at firms with a prior cross-border dealmaking record. Collectively, these findings suggest that an individual director's cross-border deal experience reflects a form of valuable human capital, in contrast to a mere predisposition to conduct familiar investments.
Number of Pages in PDF File: 47
Keywords: Mergers and acquisitions, director experience, cross-border mergers, director characteristics, internationalization
JEL Classification: D83, G34, F23, J24, J62, L20, M16working papers series
Date posted: April 9, 2012 ; Last revised: February 14, 2014
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