What Determines the Acquirers’ Location Preferences and Ownership Outcomes? An Empirical Study of East and Southeast Asian Markets

55 Pages Posted: 23 Jan 2016 Last revised: 22 Jul 2016

See all articles by Man Dang

Man Dang

Danang University of Economics

Darren Henry

La Trobe University - Department of Economics and Finance; Financial Research Network (FIRN)

Xiangkang Yin

Deakin University; Financial Research Network (FIRN)

Date Written: January 22, 2016

Abstract

This paper addresses two of the most important questions in the bidder’s acquisition planning: Should they acquire a domestic or cross-border target? Acquire partial- or full-control? In the context of eight East and Southeast Asian countries with a takeover wave following the 1997-1998 Asian financial crisis, it is found that good corporate governance of a target is a significant feature attracting both domestic and cross-border acquirers. However, target firms with poor financial performance are more likely to be acquired by domestic bidders while good-performing firms are more attractive to cross-border bidders. The findings also support the idea that the post-takeover integration process in cross-border takeovers is likely to be more problematic relative to domestic acquisitions and, therefore, the post-acquisition incremental performance improvement is greater for domestic targets compared to cross-border targets. Further, this paper indicates that targets with more independent directors, more powerful CEOs, and greater blockholdings are more likely to be taken over through partial-control rather than full-control acquisitions.

Keywords: Target firms; Acquisition location; Equity ownership outcomes; Corporate governance; Propensity score matching; Difference-In-Differences approach

JEL Classification: G32; G34

Suggested Citation

Dang, Man and Henry, Darren and Yin, Xiangkang, What Determines the Acquirers’ Location Preferences and Ownership Outcomes? An Empirical Study of East and Southeast Asian Markets (January 22, 2016). 2016 Financial Markets and Corporate Governance. Available at SSRN: https://ssrn.com/abstract=2720114 or http://dx.doi.org/10.2139/ssrn.2720114

Man Dang

Danang University of Economics ( email )

71 Ngu Hanh Son
Ngu Hanh Son
Danang City, Danang City 0511
Vietnam
+84905132054 (Phone)

Darren Henry (Contact Author)

La Trobe University - Department of Economics and Finance ( email )

Department of Economics and Finance
La Trobe Business School
Bundoora 3086 Victoria
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Xiangkang Yin

Deakin University ( email )

Melbourne, Victoria
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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