Cross-Border vs. Domestic Acquisitions: Evidence from India

55 Pages Posted: 26 Oct 2016 Last revised: 12 Jun 2017

See all articles by N.K. Chidambaran

N.K. Chidambaran

Fordham University - Gabelli School of Business

Dipali Krishnakumar

Symbiosis International University - Symbiosis Center for Management & Human Resource Development

Madhvi Sethi

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru

Date Written: June 11, 2017

Abstract

We examine the domestic and cross-border acquisition decision of Indian firms in the nine-year period from 2002 to 2010, a period following liberalization in the economy. Acquisition activity both domestic and cross-border has increased over the period. We find that larger, younger firms, firms with cash on hand and low leverage, and relatively overvalued firms are more likely to make an acquisition and prefer to make a cross-border acquisition to a domestic acquisition. Firms with lower levels of promoter (founding shareholder) holdings, larger boards, and belonging to a group are more likely to make an acquisition, but are indifferent between making a domestic or a cross-border acquisition. Industry competition is a significant determinant of acquisition activity with firms in more competitive industries are more likely to make an acquisition and more likely to make a cross-border acquisition. Our results hold controlling for acquisitions by manufacturing firms, prior M&A experience, and taking into account alternate growth strategies followed by firms.

Keywords: Mergers and Acquisitions, Product Market Competition, Emerging Markets, India

JEL Classification: G34

Suggested Citation

Chidambaran, N.K. and Krishnakumar, Dipali and Sethi, Madhvi, Cross-Border vs. Domestic Acquisitions: Evidence from India (June 11, 2017). Gabelli School of Business, Fordham University Research Paper No. 2858920, Available at SSRN: https://ssrn.com/abstract=2858920 or http://dx.doi.org/10.2139/ssrn.2858920

N.K. Chidambaran (Contact Author)

Fordham University - Gabelli School of Business ( email )

United States

Dipali Krishnakumar

Symbiosis International University - Symbiosis Center for Management & Human Resource Development ( email )

Pune, 411057
India

Madhvi Sethi

Symbiosis International University - Symbiosis Institute of Business Management, Bengaluru ( email )

Electronic City
Phase I
Bangalore, 560100
India

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