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The Role of Country-Level Differences in Influencing ASEAN Firms’ Cross-Border Mergers and Acquisitions (CBMAs) Success

Author

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  • Nurhazrina Mat Rahim

    (Faculty of Accountancy, Universiti Teknologi MARA, Malaysia)

  • Ruhani Hj. Ali

    (Graduate School of Business, Universiti Sains Malaysia, Malaysia.)

Abstract

The preference of using CBMAs as an external growth strategy spurs the interest to examining whether or not the CBMA transaction creates value that leads to a CBMA success. The decreasing trend of completed CBMA and non-value creation indicated that CBMA is a riskier transaction compared to the domestic M&As, which might be due to the risks related to cross-border transactions. Thus, this study explores the effect of the cultural distance, geographic distance, and the level of economic development in the ASEAN CBMA success. A total of 348 CBMA transactions involving the ASEAN bidder and 246 CBMA transactions involving the ASEAN target, announced and completed during the year 2002 to 2013, were analysed. Consistent with the social identity theory, a large cultural distance (power distance dimension) between the target and bidding country could adversely affect the CBMA success of ASEAN firms. Meanwhile, the geographic distance has no significant effect on the ASEAN CBMA success. The different level of economic development between the target and bidder also has a negative effect on the ASEAN CBMA success, contradicting the resourcebased view theory.

Suggested Citation

  • Nurhazrina Mat Rahim & Ruhani Hj. Ali, 2018. "The Role of Country-Level Differences in Influencing ASEAN Firms’ Cross-Border Mergers and Acquisitions (CBMAs) Success," Capital Markets Review, Malaysian Finance Association, vol. 26(1), pages 36-55.
    • Handle: RePEc:mfa:journl:v:26:y:2018:i:1:p:36-55
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    More about this item

    Keywords

    CBMAs; CBMA success; cultural distance; geographic distance; level of economic development.;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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