Strategic Management Journal, Forthcoming
40 Pages Posted: 25 Feb 2012 Last revised: 19 Sep 2016
Date Written: July 17, 2016
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.
Keywords: Mergers and acquisitions, private equity, information asymmetries
JEL Classification: G34, G32, G24
Suggested Citation: Suggested Citation
Humphery-Jenner, Mark and Sautner, Zacharias and Suchard, Jo-Ann, Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms (July 17, 2016). 25th Australasian Finance and Banking Conference 2012; Strategic Management Journal, Forthcoming; 25th Australasian Finance and Banking Conference 2012; 2013 Financial Markets & Corporate Governance Conference; UNSW Australian School of Business Research Paper No. 2012 BFIN 10. Available at SSRN: https://ssrn.com/abstract=2010453 or http://dx.doi.org/10.2139/ssrn.2010453