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

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Main author: Kling, Gerhard
Other authors: Ghobadian, Abby
Hitt, Michael A
Weitzel, Utz
O'Regan, Nicholas
Format: Journal Article           
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id eprints-17747
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
description 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’.
format Journal Article
author Kling, Gerhard
author_facet Kling, Gerhard
Ghobadian, Abby
Hitt, Michael A
Weitzel, Utz
O'Regan, Nicholas
authorStr Kling, Gerhard
author_letter Kling, Gerhard
author2 Ghobadian, Abby
Hitt, Michael A
Weitzel, Utz
O'Regan, Nicholas
author2Str Ghobadian, Abby
Hitt, Michael A
Weitzel, Utz
O'Regan, Nicholas
title The Effects of Cross-border and Cross-industry Mergers and Acquisitions on Home-region and Global Multinational Enterprises
publisher Wiley
publishDate 2013
url https://eprints.soas.ac.uk/17747/

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