Innovative Activity, Growth Options and the Heterogeneous Return Performance of Cross-border vs. Domestic M&A Firms
59 Pages Posted: 18 May 2020
Date Written: April 21, 2020
M&A deals in the US are done mostly at the domestic level. We examine the M&A performance of US acquirers during 1991-2014 based on the enhanced innovative capacity afforded by cross-border deals. We find that US firms engaging in cross-border M&A have superior innovative capacity, which results in lower short-term returns and downside risk. In contrast, long-run returns following cross-border acquisition are higher.
Keywords: acquisitions, mergers, international, equity return, real options, multinational network hypothesis
JEL Classification: G34, G11, G12
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