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Board Participation, Toeholds and the Cross-Border Effect
University of Borås, School of Engineering.
2013 (English)In: International Business Review, ISSN 0969-5931, E-ISSN 1873-6149, Vol. 22, no 5, 868-882 p.Article in journal (Refereed)
Abstract [en]

Research shows that the bid announcement return (BAR) of the acquiring firm is lower for cross-border than domestic acquisition announcements. The current lack of economically based explanations for this effect, labeled the cross-border effect by Moeller and Schlingemann (2005), motivates our study. We use unique hand-collected corporate governance data to study how the relationships between acquiring and target firms prior to a bid announcement affect the cross-border effect. Our tests show that non-operating associations between the acquiring and target firms, in the form of board participation and toeholds, have a positive effect on the BAR. The cross-border effect disappears when we control for board participation and toeholds. Thus, we suggest that the cross-border effect is at least partly a consequence of information asymmetries and the adverse selection problem that they generate.

Place, publisher, year, edition, pages
Pergamon , 2013. Vol. 22, no 5, 868-882 p.
Keyword [en]
Board participation, Cross-border acquisitions, Cross-border effect, Toeholds Sweden
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:hb:diva-1598DOI: 10.1016/j.ibusrev.2013.01.004ISI: 000321534300008Local ID: 2320/12557OAI: oai:DiVA.org:hb-1598DiVA: diva2:869667
Available from: 2015-11-13 Created: 2015-11-13

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