Mergers and acquisitions: driving the growth of MNEs

Kling, G., Ghobadian, A. and O'Regan, N. (2013) Mergers and acquisitions: driving the growth of MNEs. Academy of Management Proceedings, 2013 (1). p. 12698. ISSN 0065-0668 doi: 10.5465/AMBPP.2013.12698abstract

Abstract/Summary

This paper examines the effects of internationalization (international diversification) and diversification across industries (product diversification) through mergers and acquisitions (M&As) on the firm’s risk-return profile. Drawing on the theoretical work of Vachani (1991) and Rugman and Verbeke’s (2004) metrics, we classify firms according to their degree of product diversification and global reach. These two dimensions at the firm-level are moderators for the performance–expansion relationship. To account for the endogeneity of market entry decisions, we develop a panel vector autoregression. We show that global and host-triad multinational enterprises (MNEs) benefit from cross-border M&As, which reinforces their geographic footprint. In contrast to all other types of firms, home-triad firms exhibit higher firm value without a change in risk when conducting cross-industry M&As. This effect, however, depends on the degree of product diversification. For home-triad firms with a small product range engaging in cross- industry transactions is a value-enhancing growth strategy.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/40330
Item Type	Article
Refereed	Yes
Divisions	Henley Business School > Leadership, Organisations and Behaviour
Publisher	Academy of Management
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