Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2012-03-29
Number: 12-031/2/DSF32
Author-Name: Mark Humphery-Jenner
Author-Workplace-Name: University of New South Wales, Tilburg University
Author-Name: Zacharias Sautner
Author-Workplace-Name: University of Amsterdam, Duisenberg school of finance
Author-Name: Jo-Ann Suchard
Author-Workplace-Name: University of New South Wales
Title: Cross-Border Mergers and Acquisitions: The Role of Private Equity Firms
Abstract: We study the role of private equity firms in cross-border mergers and acquisitions. We find that private equity-owned firms are more likely to become targets in crossborderM&A transactions. This effect is particularly strong in transactions where the target or its shareholders actively reach out for an acquirer. On average, cross-borderdeals with private equity-involvement are not associated with higher announcement returns. However, announcement returns are higher if the acquirer is owned by a private equity firm and the target is from a country with poor corporate governance. We provide evidence indicating that the international networks and connections that result from prior cross-border deals can explain why private equity firms create value in such deals. Our findings suggest that private equity firms can help to reduce information asymmetries in certain cross-border M&A deals. We perform several tests to address possible endogeneity concerns.
Classification-JEL: G34, G32, G24
Keywords: Mergers and acquisitions, private equity, information asymmetries
File-Url: https://papers.tinbergen.nl/12031.pdf
File-Format: application/pdf
File-Size: 271930 bytes
Handle: RePEc:tin:wpaper:20120031