Global Expansions 'To' versus 'From' Emerging Markets: An Empirical Study of the Completion of Cross-Border Mergers & Acquisitions

Posted: 29 Jul 2013

See all articles by Chenxi Zhou

Chenxi Zhou

University of Florida - Department of Marketing

Jinhong Xie

University of Florida - Warrington College of Business Administration

Qi Wang

China Europe International Business School (CEIBS)

Date Written: June 1, 2013

Abstract

While cross-border mergers and acquisitions (M&As) involving emerging markets have been increasing in recent years, a high percentage of them collapse before completion. This study investigates how the predictors of cross-border M&A completion involving emerging markets depend upon the direction of global expansion, i.e., investment inbound to a developing market or investment outbound to a developed market. Analysis based on 30 years of data from the two largest-emerging markets, China and India, reveals fundamental differences in the predictors of inbound vs. outbound M&As completion. Inbound transactions are found to be most influenced by country-level factors reflecting differences in political, trade, and legal environments. By contrast, outbound transactions are most influenced by firm-level factors such as the initiator’s size and experience. Furthermore, deal-level factors, (e.g., percentage of stake sought by the acquirer, whether the deal size is disclosed, and whether the deal is a cash transaction), have significantly different effects on inbound and outbound M&As. These findings have important managerial implications for enhancing the success of global expansions.

Keywords: Emerging Markets, Global Expansions, Cross-Border Mergers & Acquisitions, International Marketing, Marketing Strategy, Cross-Cultural

JEL Classification: F2, M31

Suggested Citation

Zhou, Chenxi and Xie, Jinhong and Wang, Qi, Global Expansions 'To' versus 'From' Emerging Markets: An Empirical Study of the Completion of Cross-Border Mergers & Acquisitions (June 1, 2013). Available at SSRN: https://ssrn.com/abstract=2302213

Chenxi Zhou

University of Florida - Department of Marketing ( email )

Gainesville, FL 32611
United States

Jinhong Xie (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

209 Bryan Hall Campus Box 117155
Gainesville, FL 32611-7166
United States
352-392-0161 Ext. 1233 (Phone)
352-846-0457 (Fax)

HOME PAGE: http://bear.cba.ufl.edu/xie/Xie_DirectoryProfile.htm

Qi Wang

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

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