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International Deal Experience and Cross-Border Acquisitions

Caleb Stroup

Davidson College

November 28, 2015

Economic Inquiry, Forthcoming

I show that corporate directors' human capital facilitates international investments. Directors' experience with cross-border transactions positively influences firms' decisions to conduct their first cross-border acquisitions. Cross-border acquirers are more likely to buy firms headquartered in countries with which the directors have prior deal experience. This effect is strongest for target firms headquartered in culturally and institutionally dissimilar countries. Announced cross-border acquisitions are received more favorably by financial markets and are more likely to be completed successfully when the announcing firm has a director with cross-border acquisition experience. These effects are not driven by investment bank involvement in the deal process or by other forms of directors' human capital, and they are robust to endogeneity of director hires.

Number of Pages in PDF File: 57

Keywords: Cross-border Mergers and Acquisitions, Foreign Direct Investment, Boards of Directors, Human Capital

JEL Classification: F23, F21, J24, L23

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Date posted: April 9, 2012 ; Last revised: June 8, 2016

Suggested Citation

Stroup, Caleb, International Deal Experience and Cross-Border Acquisitions (November 28, 2015). Economic Inquiry, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2037512 or http://dx.doi.org/10.2139/ssrn.2037512

Contact Information

Caleb Stroup (Contact Author)
Davidson College ( email )
Box 7123
Davidson, NC 28035
United States
HOME PAGE: http://https://sites.google.com/site/calebstroupeconomics/
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References:  106