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Impact of Economic Freedom Distance on India’s Inbound Cross-Border Acquisition Volume: Moderating Role of Economic Distance

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  • Chandrika Raghavendra

    (Department of Management and Commerce, Amrita School of Arts, Humanities and Sciences, Mysuru Campus, Amrita Vishwa Vidyapeetham, Bogadi 570026, Karnataka, India)

  • Mahesh Rampilla

    (Department of Management and Commerce, Amrita School of Arts, Humanities and Sciences, Mysuru Campus, Amrita Vishwa Vidyapeetham, Bogadi 570026, Karnataka, India)

  • Venkata Ramana Thanikella

    (Birla Institute of Management Technology, Greater Noida 201306, Uttar Pradesh, India)

  • Isha Gupta

    (Amity University, Noida 201303, Uttar Pradesh, India)

Abstract

Cross-border acquisitions (CBA) are a form of foreign direct investments and have been dramatically increasing over the last three decades. India has been one of the top CBA destinations among emerging economies, making it interesting to explore the determinants. Even though the CBA research is voluminous, the role of economic freedom is understudied. In this background, by extending the knowledge of distance measures impacting cross-border acquisition (CBA) activities, we examine the impact of economic freedom distance on India’s inbound CBA volume and the moderating role of economic distance. We used a sample of 979 observations by collecting the CBA data from Thomson’s EIKON Mergers and Acquisitions database for our study period covering 1990 to 2020. We show that economic freedom distance negatively impacts India’s inbound CBA volume. Moreover, economic distance significantly moderated their effect. These results indicate that India should strengthen its economic freedom and grow steadily to attract more CBA volume inflow. These findings have important theoretical and practical implications for multinational firms and policymakers in making emerging economies like India an attractive destination for CBA activities.

Suggested Citation

  • Chandrika Raghavendra & Mahesh Rampilla & Venkata Ramana Thanikella & Isha Gupta, 2023. "Impact of Economic Freedom Distance on India’s Inbound Cross-Border Acquisition Volume: Moderating Role of Economic Distance," JRFM, MDPI, vol. 16(1), pages 1-18, January.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:1:p:39-:d:1029171
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    References listed on IDEAS

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    1. Basuil, Dynah A. & Datta, Deepak K., 2019. "Effects of Firm-specific and Country-specific Advantages on Relative Acquisition Size in Service Sector Cross-Border Acquisitions: An Empirical Examination," Journal of International Management, Elsevier, vol. 25(1), pages 66-80.
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    Cited by:

    1. Raghavendra, Chandrika & Sharif, Taimur & Mahesh, Rampilla & Yadav, Miklesh Prasad & Abedin, Mohammad Zoynul, 2023. "Do market, resource and knowledge distance impact inbound cross-border acquisition?," Global Finance Journal, Elsevier, vol. 57(C).

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