The long-term impact on operating performance of emerging to developed acquisitions

: acquirer's perspective : an empirical study

Abstract

A new type of M&A activity has been growing in value and relevance in the 21st century: firms from emerging markets buying firms from developed markets. This paper seeks to study the long-­‐term impact for the acquirers of such deals on their operating performance and what factors influence this impact. This study uses a difference-­‐in-­‐ difference approach on a sample of recent deals containing 122 acquirers from 12 different emerging countries to conclude that their operating performance deteriorates following the deals, when compared to a relevant peer group of firms that did not engage in M&A activity, specifically through losses in margin. We further conclude that large acquirers and firms with low cash holdings and high leverage do better following the deal, while firms engaging in deals quite large in relation do their own size do worst. Absolute deal value, similarity between the target and acquirer’s industry and cash payment for the deal seem to have no impact on post-­‐acquisition performance. Finally, stock markets do not appear to anticipate the impact of such deals on firm value at the announcement date.

Date of Award	18 Jun 2013
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Pramuan Bunkanwanicha (Supervisor)