In:
British Journal of Management, Wiley, Vol. 25, No. S1 ( 2014-01)
Abstract:
We examine the effects of international and product diversification through mergers and acquisitions ( M & A s) on the firm's risk–return profile. We identify the rewards from different types of M & A s and investigate whether becoming a global firm is a value‐enhancing strategy. Drawing on the theoretical work of V achani ( J ournal of I nternational B usiness S tudies , 22 (1991), pp. 307−222) and on Rugman and Verbeke's ( J ournal of I nternational B usiness S tudies , 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 & A s, we develop a panel vector autoregression. We find that global and host‐region multinational enterprises benefit from cross‐border M & A s that reinforce their geographical footprint. Cross‐industry M & A s 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’.
Type of Medium:
Online Resource
ISSN:
1045-3172
,
1467-8551
DOI:
10.1111/bjom.2014.25.issue-s1
DOI:
10.1111/1467-8551.12023
Language:
English
Publisher:
Wiley
Publication Date:
2014
detail.hit.zdb_id:
2025938-4
SSG:
3,2
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