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An analysis of short‐run performance of cross‐border mergers and acquisitions

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  • Moshfique Uddin
  • Agyenim Boateng

Abstract

Purpose - The aim of this paper is to consider the short‐run performance of UK firms acquiring foreign target firms over a period of 1994‐2003 and to explore the impact of deal size and other firm‐specific factors on performance. Cross‐border mergers and acquisitions have witnessed a substantial growth worldwide, with the UK being one of the top acquiring nations in the global market for corporate control. Design/methodology/approach - The paper first uses event study methodology to analyse short‐run share price performance. Then a univariate analysis to examine the factors influencing the short‐run performance based on a sample of 373 acquisitions over the period of 1994 to 2003. Findings - The study finds that the UK acquirers do not earn statistically significant positive abnormal returns in the short‐run. Univariate analysis shows that short‐run performance of UK acquirers is influenced by the form of target, acquisition strategy, geographical origin of target firm and the payment methods. However, the study finds no support for size of acquisition deal as a determinant of performance of acquiring firm. Originality/value - The paper attempts to shed more light and extend existing research in cross‐border mergers and acquisitions by examining short‐run performance and factors influencing performance.

Suggested Citation

  • Moshfique Uddin & Agyenim Boateng, 2009. "An analysis of short‐run performance of cross‐border mergers and acquisitions," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 8(4), pages 431-453, October.
    • Handle: RePEc:eme:rafpps:v:8:y:2009:i:4:p:431-453
    DOI: 10.1108/14757700911006967
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    4. Mateev, Miroslav & Andonov, Kristiyan, 2016. "Do cross-border and domestic bidding firms perform differently? New evidence from continental Europe and the UK," Research in International Business and Finance, Elsevier, vol. 37(C), pages 327-349.
    5. Chidambaran, N.K. & Krishnakumar, Dipali & Sethi, Madhvi, 2018. "Cross-border vs. domestic acquisitions: Evidence from India," Journal of Economics and Business, Elsevier, vol. 95(C), pages 3-25.
    6. Yanga, Shuying & Kim, Seongcheol, 2017. "Do Cross-border M&As by Chinese Media and Entertainment Firms Create Value? Evidence from US-targeted and Korea-targeted Deals," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168549, International Telecommunications Society (ITS).
    7. Khurshid Ali & Zeeshan Khan & Numan Khan & Abdul-Hamid Ibrahim Alsubaie & Fazal Subhan & Moumen Kanadil, 2016. "Performance Evaluation of UK Acquiring Companies in the Pre and Post-Acquisitions Periods," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(2), pages 130-138.
    8. Du, Min & Boateng, Agyenim, 2015. "State ownership, institutional effects and value creation in cross-border mergers & acquisitions by Chinese firms," International Business Review, Elsevier, vol. 24(3), pages 430-442.

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