Political affinity and investors' response to the acquisition premium in cross-border M&A transactions - A moderation analysis

• 成果类型: Article
• 署名作者: Fieberg, Christian; Lopatta, Kerstin; Tammen, Thomas; Tideman, Sebastian A.
• 署名单位: University of Bremen; City University of Hong Kong; University of Hamburg; University of Exeter
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.3325
• 发表日期: 2021
• 页码: 2477-2492
• 关键词: acquisition premium; Cross-border mergers and acquisitions; Investor reaction; moderation analysis; Political affinity

摘要

This article investigates the moderating effect of political affinity between countries on investors' reactions to the premium in cross-border acquisitions (CBAs). Based on a sample of 1,183 CBAs between 1999 and 2018, we find that political affinity positively moderates the relationship between the acquisition premium and the acquiring and target firms' stock market return. We argue that investors use political affinity to assess the reliability of the premium (i.e., management's overall perception of a given deal's synergistic potential). This is in line with prior literature reasoning that, unlike strong political affinity, weak political affinity increases the likelihood of government intervention, decreases the likelihood of deal completion, and results in higher premiums to mitigate the previous effects, thus potentially increasing the likelihood of value destruction.