Research Discussion Papers, Bank of Finland
No 17/2014:
Can firms learn by observing? Evidence from cross-border M&As
Bill B. Francis ()
, Iftekhar Hasan ()
, Xian Sun ()
and Maya Waisman ()
Abstract: In the presence of high uncertainty and limited
experience, can observing the actions of other acquiring predecessors help
firms make better acquisition decisions? Using a sample of cross-border
M&As conducted by US acquirers in developing countries, we document a
positive and significant relationship between an acquirer’s performance and
its predecessors’ acquisition activity. This relationship is especially
pronounced in the prevalence of news events about the outcome of
predecessors’ acquisitions, when predecessors consist of US peers from the
same industry and/or when targets are based in culturally distant
countries. Our findings shed light on one channel through which information
spillovers across industries and acquiring firms could be a key driver of
value creation in developing market cross-border M&As.
Keywords: learning; observing; cross-border M&As performance; (follow links to similar papers)
JEL-Codes: D23; D83; G14; G32; G34; (follow links to similar papers)
42 pages, July 9, 2014
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- This paper is published as:
-
Francis, Bill B., Iftekhar Hasan, Xian Sun and Maya Waisman, (2014), 'Can firms learn by observing? Evidence from cross-border M&As', Journal of Corporate Finance, Vol. 25, April, pages 202-215
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