The Effects of Cross-border and Cross-industry Mergers and Acquisitions on Home-region and Global Multinational Enterprises

Abstract

We examine the effects of international and product diversification through mergers and acquisitions (M&As) on the firm's risk-return profile. We identify the rewards from different types of M&As and investigate whether becoming a global firm is a value-enhancing strategy. Drawing on the theoretical work of Vachani (Journal of International Business Studies, 22 (1991), pp. 307-222) and on Rugman and Verbeke's (Journal of International Business Studies, 35 (2004), pp. 3-18) metrics, we classify firms according to their degree of international and product diversification. To account for the endogeneity of M&As, we develop a panel vector autoregression. We find that global and host-region multinational enterprises benefit from cross-border M&As that reinforce their geographical footprint. Cross-industry M&As enhance the risk-return profile of home-region firms. This effect depends on the degree of product diversification. Hence there is no value-enhancing M&A strategy for home-region and bi-regional firms to become 'truly global'.

Publication DOI: https://doi.org/10.1111/1467-8551.12023
Divisions: College of Business and Social Sciences > Aston Business School
College of Business and Social Sciences > Aston Business School > Marketing & Strategy
Additional Information: This is the peer reviewed version of the following article: Kling, G. , Ghobadian, A. , Hitt, M. A., Weitzel, U. and O'Regan, N. (2014), Cross‐border and Cross‐industry Mergers and Acquisitions. Brit J Manage, 25: S116-S132, which has been published in final form at https://doi.org/10.1111/1467-8551.12023.  This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Uncontrolled Keywords: Business, Management and Accounting(all),Strategy and Management,Management of Technology and Innovation
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Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
https://onlinel ... 1467-8551.12023 (Publisher URL)
PURE Output Type: Article
Published Date: 2014-01-01
Published Online Date: 2013-07-17
Authors: Kling, Gerhard
Ghobadian, Abby
Hitt, Michael A.
Weitzel, Utz
O'Regan, Nicholas (ORCID Profile 0000-0003-3014-0373)

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