Utilizing Management Technology Advantages in Cross-Border Acquisitions

61 Pages Posted: 6 Dec 2017 Last revised: 1 Feb 2018

See all articles by Tolga Demir

Tolga Demir

Bilkent University; Stockholm School of Economics; Swedish House of Finance

Date Written: January 31, 2018

Abstract

A growing literature documents that management quality accounts for an important portion of the differences in productivity across firms and countries. One route through which management practices could affect productivity is through mergers and acquisitions. In this paper, I investigate the role of management quality on cross-border acquisition activities and outcomes. I find that cross-border deal volume is positively associated with management quality differences across countries and firms. Firms with better management practices are more likely to be the acquirers. Acquisition premia paid to the target are positively related to the difference in management quality between the acquirer and target firms. Managers of the target firm are more likely to quit when the acquiring firm has better management practices. Lastly, target firms are less likely to be divested post-acquisition when acquirer firms have better management practices. My results indicate that management as a strategic intangible asset plays an important role in the cross-border acquisition plans, activities and outcomes.

Keywords: Management Practices, Productivity, Mergers and Acquisitions, Cross-Border, International Expansion

JEL Classification: D22, F21, F23, G34, L2, M14, M16

Suggested Citation

Demir, Tolga, Utilizing Management Technology Advantages in Cross-Border Acquisitions (January 31, 2018). Swedish House of Finance Research Paper No. 18-2, Available at SSRN: https://ssrn.com/abstract=3079746 or http://dx.doi.org/10.2139/ssrn.3079746

Tolga Demir (Contact Author)

Bilkent University ( email )

Ankara, Ankara 06800
Turkey
+90 312 290 1657 (Phone)

HOME PAGE: http://fba.bilkent.edu.tr/

Stockholm School of Economics ( email )

111 60 Stockholm
Sweden

Swedish House of Finance ( email )

SE-113 83 Stockholm
Sweden

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