The effects of cross-border and cross-industry mergers and acquisitions on home-region and global multinational enterprises

Kling, G., Ghobadian, A., Hitt, M. A., Weitzel, U. and O'Regan, N. (2014) The effects of cross-border and cross-industry mergers and acquisitions on home-region and global multinational enterprises. British Journal of Management, 25 (S1). S116-S132. ISSN 1467-8551 doi: 10.1111/1467-8551.12023

Abstract/Summary

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’.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/33420
Item Type	Article
Refereed	Yes
Divisions	Henley Business School > Leadership, Organisations and Behaviour
Publisher	Wiley
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