Mitigating risk in international mergers and acquisitions: the role of contingent payouts

• 成果类型: Article
• 署名作者: Reuer, JJ; Shenkar, O; Ragozzino, R
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/palgrave.jibs.8400053
• 发表日期: 2004
• 页码: 19-32
• 关键词: contingent earnouts; international mergers and acquisitions; adverse selection

摘要

Previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode. It is important to examine these contractual details, as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another. In the case of international mergers and acquisitions (M&As), a key contractual variable is whether the parties agree to a performance-contingent payout structure, which can mitigate the risk of adverse selection. In this paper, we examine the antecedents of contingent payouts in the form of earnouts and stock payments. The results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high-tech and service industries. Firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability. Journal of International Business Studies.