Impact of the Financial Crisis on the Performance of European Acquisitions

This study looks at the impact of the recent financial crisis on the short-term performance of European acquisitions. We use institutional theory and transaction cost economic theory to study whether bidders derive lower or higher returns from acquisitions announced after 2008. We investigate shareholders’ stock price reaction to 2245 deals which occurred during 2004–12 across 22 European Union countries. Our results from both univariate and multivariate analysis show that the deals announced in the post-crisis period, corresponding to the period of economic recession, generate higher returns to shareholders as compared to acquisitions announced in the pre-crisis period. We also test the relevance of the Economic and Monetary Union (EMU), that is, the Eurozone, to this value accrual during the recessionary period. We observe that non-EMU transactions obtain significantly higher gains vis-à-vis EMU transactions in the post-crisis years. Overall, announcement returns of European acquisitions have been affected by the financial crisis and the global recession; and companies that target countries with different currency regimes are likely to generate better returns from their acquisitions

Impact of the Financial Crisis on Cross-Border Mergers and Acquisitions and Concentration in the Global Banking Industry

© 2015 Wiley Periodicals, Inc. The global banking industry has seen dramatic changes in the past 40 years. Most recently, the financial liberalization of emerging markets and the global financial crisis have significantly impacted the market share of banks worldwide. This article investigates the impact of the 2007-2008 financial crisis on cross-border mergers and acquisitions (M&As) in the banking sector and emphasizes the role of emerging-market banks in the postcrisis consolidation trend. Using M&A data and concentration data over the period 2000-2013, our analysis indicates that the financial crisis had a significant impact on worldwide M&As, especially on the direction of the transactions. Emerging-market banks appear to be major acquirers in the postcrisis period, targeting both neighboring countries and developed economies in Europe. We also observe an increase in bank concentration in developed markets most hit by the financial crisis, especially in the United States and the United Kingdom, whereas bank concentration decreased in emerging markets

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

During the recent decade, the world has witnessed the rapid growth of MNEs from emerging economies. Their increasing participation in cross-border mergers and acquisitions has raised great attention in the extant literature. This study evaluates the value creation from these cross-border transactions from two representative emerging countries, namely China and India, and determines factors that result in the different performance of these international acquisition activities. Cross-border acquisitions conducted by these countries' companies indeed lead to significant shareholder wealth creation. Furthermore, Indian shareholders are more likely to benefit from deals in small cultural distance countries, while Chinese investors gain from the cross-border expansion of manufacturing companies. Location also affects the performance of cross-border acquisitions, with acquisitions into developed countries generating higher returns to shareholders. Our sample consists of 203 Indian and 63 Chinese cross-border deals over the period 2000-2010 and our results hold after controlling for various deal-level and firm-level characteristics. © 2013 Elsevier Ltd

Standardization versus adaptation of global marketing strategies in emerging market cross-border acquisitions

Purpose: The recent increase in the presence of emerging-market firms (EMFs) in global markets requires a closer examination of their international marketing strategies (including branding). This paper examines the factors behind the standardization or adaptation of global marketing strategies adopted by EMFs for their cross-border acquisitions. Methodology/Approach: This paper examines the determinants of the marketing strategies adopted by Indian and Chinese firms for their cross-border acquisitions. The drivers of the standardization/adaptation of marketing strategies (including branding) are identified using both quantitative data collected in 168 cross-border acquisitions conducted by the EMFs mentioned above and the institutional theory and organizational identity literature. Findings: Institutional factors have a stronger effect than organizational identities on global marketing strategies, including branding. The standardization of the EMFs’ marketing strategies is driven by the private statuses of the acquirers, legal distances, target countries’ 2 economic development, and the ethnic ties that exist between the home and host countries. The acquirers’ decisions to retain the targets’ brand identities, thus adapting their global marketing strategies, is related to the cultural distances, economic freedom distances and sizes of the targets. Research limitations/implications: In this study, two large emerging markets—India and China—are used to gather the empirical data; future works can expand upon this line of research and examine other EMFs. Practical Implications: The acquiring companies have to decide whether to adopt an adaption marketing strategy, with reference to the acquired targets’ local stakeholder requirements, or to incorporate their targets’ brands into their own global marketing strategies. Originality/ Value: Typically, previous work on the adaptation versus standardization of global marketing strategies adopted in the wake of cross-border deals has focused on acquisitions involving companies from developed countries; this paper extends the field of research to the EMFs of two of the most important developing countries: China and India

The effects of ownership identity on corporate diversification strategy of Chinese companies in foreign markets

In this paper, we examine the impact of acquirer’s ownership identity on corporate diversification decisions of Chinese companies in their cross-border acquisitions. Few studies to date have looked at the effect of ownership on corporate decisions to diversify abroad, particularly in the emerging market context. We find that certain characteristics of acquirer’s ownership identity such as the government ownership, business group membership and being publicly traded will be negatively linked with industry diversification in international markets. Also, the effects of ownership identities are contingent upon the host country selection, and acquisitions into developed host countries are likely to be in unrelated industries. We observe that Chinese companies that buy in developed markets engage in global consolidation. These results support our arguments on domestic market protection strategies adopted by the Chinese companies for mitigating competition from their developed market rivals

Nature of technology and location effects on firm performance in the US medical device industry

This paper examines the location effects on firm performance (sales, employment and market value) by analyzing geographical and technological proximities in the US medical device industry. The nature of technology is introduced as a new way to scrutinize the impact of various proximities, and the findings indicate that the geographical and technological proximity in itself does not affect performance, whereas the spatially-mediated technological proximity, characterized by the technological proximity within a cluster, positively influences the performance of medical device firms. The paper addresses an important theoretical question. It consequently contributes to the effects of different proximities and nature of technology on firm performance and provides relative managerial implications interlocked with insights obtained from the medical industry

Essential micro-foundations for contemporary business operations: top management tangible competencies, relationship-based business networks and environmental sustainability

Although various studies have emphasized linkages between firm competencies, networks and sustainability at organizational level, the links between top management tangible competencies (e.g., contemporary relevant quantitative-focused education such as big data analytics and data-driven applications linked with the internet of things, relevant experience and analytical business applications), relationship-based business networks (RBNs) and environmental sustainability have not been well established at micro-level, and there is a literature gap in terms of investigating these relationships. This study examines these links based on the unique data collected from 175 top management representatives (chief executive officers and managing directors) working in food import and export firms headquartered in the UK and New Zealand. Our results from structural equation modelling indicate that top management tangible competencies (TMTCs) are the key determinants for building RBNs, mediating the correlation between TMTCs and environmental sustainability. Directly, the competencies also play a vital role towards environmental practices. The findings further depict that relationship-oriented firms perform better compared to those which focus less on such networks. Consequently, our findings provide a deeper understanding of the micro-foundations of environmental sustainability based on TMTCs rooted in the resource-based view and RBNs entrenched in the social network theory. We discuss the theoretical and practical implications of our findings, and we provide suggestions for future research

Age Matters: The Contingency of Economic Distance and Economic Freedom in Emerging Market Firm’s Cross-Border M&A Performance

The primary studies on emerging market multinational firms (EMFs) thus far have depicted a picture of accelerated internationalization in which EMFs conduct a series of aggressive cross-border acquisitions to further enhance their competitive advantage. However, it is not clear whether the EMFs which conducted the acquisitions at a young age experience better performance. EMFs constrained by their home market development in economic institutions may encounter different challenges in their cross-border acquisitions. Using a sample of South African firms’ acquisitions between 1994 and 2012, we find support for the benefit of foreign acquisitions at a young age as well as the moderation effects of economic distance and economic freedom. While early inorganic growth provides an excellent opportunity to propel South African firms’ growth, the country level factors present important boundary conditions to examine the benefit of early internationalization. While facing a significant economic distance, older firms are better at utilizing their experience and experience better post-acquisition operating performance. By contrast, the younger firms benefit more from the post-acquisition when the home country has weaker economic freedom

Out of Africa: The role of institutional distance and host-home colonial tie in South African Firms’ post-acquisition performance in developed economies

The colonial ties and institutional distance affect the cross-border acquisition performance of internationalizing South African firms who acquire targets in developed economies. Along with these main effects, this paper examines the moderating effect of the colonial tie on the effects of institutional distance on post-acquisition long-term operating performance. Using data on South African acquisitions in developed economies, this study finds that the colonial tie has a negative impact on the long-term operating performance of South African acquirers. Yet, the colonial tie also moderates the effects of institutional distance. This work contributes to the discussion on host-home country institutional distance and its impact on post-acquisition long-term operating performance and how colonial past can influence the performance of acquirers from South Africa and other such countries with colonial history

On Reconfiguring 5G Network Slices

The virtual resources of 5G networks are expected to scale and support migration to other locations within the substrate. In this context, a configuration for 5G network slices details the instantaneous mapping of the virtual resources across all slices on the substrate, and a feasible configuration satisfies the Service-Level Objectives (SLOs) without overloading the substrate. Reconfiguring a network from a given source configuration to the desired target configuration involves identifying an ordered sequence of feasible configurations from the source to the target. The proposed solutions for finding such a sequence are optimized for data centers and cannot be used as-is for reconfiguring 5G network slices. We present Matryoshka, our divide-and-conquer approach for finding a sequence of feasible configurations that can be used to reconfigure 5G network slices. Unlike previous approaches, Matryoshka also considers the bandwidth and latency constraints between the network functions of network slices. Evaluating Matryoshka required a dataset of pairs of source and target configurations. Because such a dataset is currently unavailable, we analyze proof of concept roll-outs, trends in standardization bodies, and research sources to compile an input dataset. On using Matryoshka on our dataset, we observe that it yields close-to-optimal reconfiguration sequences 10X faster than existing approaches.Peer reviewe