U.S. Takeovers in Foreign Markets: Do They Impact Emerging and Developed Markets Differently?

45 Pages Posted: 26 Apr 2011

See all articles by Natasha Burns

Natasha Burns

University of Texas at San Antonio - Department of Finance

Ivonne A. Liebenberg

Date Written: April 25, 2011

Abstract

We investigate the effect that U.S. acquisitions of targets in emerging and developed countries have on the targets’ rivals by measuring their stock price reaction to the acquisition announcement. On average, emerging market rivals react positively to these acquisitions while the reaction in developed markets is insignificant. In developed markets, the main factors explaining the reaction of rival firms are individual rival characteristics such as rival size, efficiency, growth opportunities, and leverage. In contrast, in emerging markets, country, industry, and acquisition characteristics such as economic development, shareholder protection, and the target’s public status, industry, and percent acquired, play a more important role.

Keywords: Cross-border merger and acquisitions, rivals, emerging markets

JEL Classification: G14, G34

Suggested Citation

Burns, Natasha and Liebenberg, Ivonne A., U.S. Takeovers in Foreign Markets: Do They Impact Emerging and Developed Markets Differently? (April 25, 2011). Journal of Corporate Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1822437

Natasha Burns (Contact Author)

University of Texas at San Antonio - Department of Finance ( email )

San Antonio, TX 78249
United States
210-458-6838 (Phone)

No contact information is available for Ivonne A. Liebenberg

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