M&A Motives and Home Country Institutions: Evidence from Asian-Pacific Acquisitions in Europe

Abstract

With cross-border acquisitions on the rise, especially by multinationals from the Asia-Pacific region, it is important to better understand their motives. Using the Marketline Advantage data on over 700 cross-border acquisitions of European firms by Asian-Pacific multinationals in 2007-2017, we analyse 11 types of rationales for these deals and how they relate to income levels and institutional development of the acquirers’ home countries. We find that the home country development mostly does not affect propensity to invest with a particular motive. However, the quality of the home country’s regulatory environment is significantly and positively related to M&A motives. We conclude with implications for the research on emerging market multinationals, international M&A strategy and outward FDI policies of emerging economies.

Keywords: mergers and acquisitions, international strategy, emerging markets, foreign direct investment, diversification, institutions, acquisition motives, emerging market multinationals

JEL Classification: G34, F63, F21, F23, P48