Can Firms Learn by Observing? Evidence from Cross-Border M&As

Journal of Corporate Finance, Volume 25, April 2014: 202–215

Bank of Finland Research Discussion Paper No. 17/2014

42 Pages Posted: 7 Oct 2014

See all articles by Bill Francis

Bill Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology

Iftekhar Hasan

Fordham University - Gabelli School of Business; Bank of Finland

Xian Sun

Johns Hopkins University - Carey Business School

Maya Waisman

Fordham University - Gabelli School of Business

Date Written: July 9, 2014

Abstract

​In the presence of high uncertainty and limited experience, can observing the actions of other acquiring predecessors help firms make better acquisition decisions? Using a sample of cross-border M&As conducted by US acquirers in developing countries, we document a positive and significant relationship between an acquirer’s performance and its predecessors’ acquisition activity. This relationship is especially pronounced in the prevalence of news events about the outcome of predecessors’ acquisitions, when predecessors consist of US peers from the same industry and/or when targets are based in culturally distant countries. Our findings shed light on one channel through which information spillovers across industries and acquiring firms could be a key driver of value creation in developing market cross-border M&As.

Keywords: learning, observing, cross-border M&As, performance

JEL Classification: D23, D83, G14, G32, G34

Suggested Citation

Francis, Bill and Hasan, Iftekhar and Sun, Xian and Waisman, Maya, Can Firms Learn by Observing? Evidence from Cross-Border M&As (July 9, 2014). Journal of Corporate Finance, Volume 25, April 2014: 202–215 ; Bank of Finland Research Discussion Paper No. 17/2014. Available at SSRN: https://ssrn.com/abstract=2505968

Bill Francis (Contact Author)

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology ( email )

110 8th St
Troy, NY 12180
United States

Iftekhar Hasan

Fordham University - Gabelli School of Business ( email )

Rose Hill Campus Bronx
New York, NY 10458
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

Xian Sun

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Maya Waisman

Fordham University - Gabelli School of Business ( email )

113 West 60th Street
Bronx, NY 10458
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
69
Abstract Views
636
rank
347,932
PlumX Metrics