Corporate Multinationality and Acquirer Returns

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Agyei-Boapeah H., Fosu S., NTIM C.

Abacus, vol.56, no.2, pp.230-267, 2020 (SSCI, Scopus) identifier

  • Nəşrin Növü: Article / Article
  • Cild: 56 Say: 2
  • Nəşr tarixi: 2020
  • Doi nömrəsi: 10.1111/abac.12146
  • jurnalın adı: Abacus
  • Jurnalın baxıldığı indekslər: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, Public Affairs Index, DIALNET
  • Səhifə sayı: pp.230-267
  • Açar sözlər: Corporate multinationality, Firm capabilities, Geographic diversification, M&As, Multinational corporations, UK
  • Açıq Arxiv Kolleksiyası: Məqalə
  • Adres: Bəli

Qısa məlumat

This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and, thereby, require superior managerial capabilities to succeed.