Multilatinas and Value Creation from Cross-Border Acquisitions: An Event Study Approach
Journal Title: BAR: Brazilian Administration Review - Year 2013, Vol 10, Issue 4
Abstract
The central proposition of this paper is to assess the performance of cross-border acquisitions made by Multilatinas. Applying the event study method to a sample of 607 announcements of acquisitions during the period 1989-2011 by 182 Multilatinas from Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela, we conclude that: (a) on average, these announcements have a neutral impact on the short-term returns to acquiring companies’ shareholders; (b) cross-sectional analysis reveals that relative size of the deals have a negative and significant effect on investors’ reactions and; (c) unlike the institutional distance between home and host countries, cultural distance matters, since it has a negative and significant effect on the perceptions that investors have regarding the expected economic impact of acquirers’ cross-border merger and acquisition (M&A) decisions. Inasmuch as the market rationality assumption that underlies the event study method has been questioned, future research lines are proposed in order to search for alternative long-term performance constructs concerning M&A processes in general that can: (a) shed light on the reality of value creation (and destruction) from cross-border acquisitions made by Multilatinas; and (b) contribute to strategy, international business and M&A theories and practice.
Authors and Affiliations
Dakessian, Leon Chant; Feldmann, Paulo Roberto
Keywords
Related Articles
- EP ID EP40557
- DOI -
- Views 224
- Downloads 0
Internationalization and Diversification Strategies of Agricultural Cooperatives: a Quantitative Study of the Agricultural Cooperatives in the State of Parana
This study investigates the impact of internationalization on the results achieved by agricultural cooperatives in the State of Parana, at the same time examining strategies for diversification of markets as well as div...
Effects of Path Dependence on Capabilities in Captive Global Value Chains
Global Value Chains (GVC) and their participants are dynamic. Events can provoke distinct strategic responses from different firms, even when they are part of a GVC. We investigated how both organizational and supplycha...
Determinants of Scale Efficiency in the Brazilian Third-Party Logistics Industry from 2001 to 2009
This article investigates the Brazilian third-party logistics (3PL) sector which, increasingly competitive, offers clients a wide variety of services/information technologies in the quest to bolster efficiency. The main...
New Technologies, Old Habits: Automation without Innovation
This research investigated the underuse of technological tools by innovative organizations which are acknowledged for their use of and familiarity with new technologies. The research conducted an analysis of 58 institu...
Network Effects on Radical Innovation and Financial Performance: An Open-mindedness Approach
This study examines how companies can achieve high performance through certain organizational behaviors (open-mindedness and social networks) and innovation. The impact of open-mindedness in defiance of basic assumptio...