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Cross-border mergers and acquisitions by emerging country banks: What do acquisition premiums tell us?

Author

Listed:
  • Canan Yildirim

    (ESC [Rennes] - ESC Rennes School of Business)

  • Mouloud Tensaout

    (ARGUMans - Laboratoire de recherche en gestion Le Mans Université - UM - Le Mans Université)

  • Veronika Belousova

    (HSE - Vysšaja škola èkonomiki = National Research University Higher School of Economics [Moscow])

Abstract

Our knowledge of international expansion motives and strategies of emerging country banks (ECBs) is limited. Using a worldwide sample of cross-border mergers and acquisitions (CBMAs) and a mixed model, we explore firm- and country-level determinants of acquisition premiums. We show that the effects of target bank and target country characteristics on premiums are contingent on the acquirer's home country: emerging vs. advanced. More specifically, compared to advanced country acquirers, ECBs pay lower premiums for targets that are: (i) more efficient; (ii) offering better functional diversification opportunities; and (iii) based in markets with higher growth prospects or better institutional development levels. Furthermore, state-owned ECBs pay higher premiums. Our findings suggest that CBMAs undertaken by ECBs might not be motivated by competence-enhancing strategies while being less sensitive to the target country's institutional development.

Suggested Citation

  • Canan Yildirim & Mouloud Tensaout & Veronika Belousova, 2023. "Cross-border mergers and acquisitions by emerging country banks: What do acquisition premiums tell us?," Post-Print hal-04224961, HAL.
    • Handle: RePEc:hal:journl:hal-04224961
    DOI: 10.1016/j.ribaf.2023.102042
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    Cited by:

    1. Sun, Zeyu & Kong, Ningning & Wu, Lei & Bao, Yu, 2024. "Does contingent payment in M&As induce acquirers’ earnings management? Evidence from performance commitment," Research in International Business and Finance, Elsevier, vol. 69(C).

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