Abstract
Do international acquisitions—in contrast to their domestic counterparts—create value for the acquiring firms' shareholders? This study examines the valuation consequences of 276 U.S. international acquisitions made in the period 1975–1988, and provides direct evidence on the effect of international acquisitions on the market value of U.S. bidding firms. It is shown that, on average, international acquisitions create value for the acquiring firms. The study also finds that the value created is a function of the nature of the acquisition (e.g., related or unrelated); the nature of the bidding firm's industry (e.g., its concentration level and advertising intensity); the nature of the acquiring firm (e.g., its prior international experience and its current profitability); and the nature of the macroeconomic environment (e.g., tax regulations and the relative strength of the U.S. dollar).
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*Constantinos Markides (DBA, Harvard Business School) is Assistant Professor of Strategic and International Management at the London Business School. His current research interests include the management of diversified firms and the market for corporate control in Europe and the United States.
**Christopher D. Ittner (DBA, Harvard Business School) is the Joseph Wharton Term Assistant Professor of Accounting at the Wharton School of the University of Pennsylvania. His research interests include cost management techniques and international comparisons of control system characteristics.
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Markides, C., Ittner, C. Shareholder Benefits from Corporate International Diversification: Evidence from U.S. International Acquisitions. J Int Bus Stud 25, 343–366 (1994). https://doi.org/10.1057/palgrave.jibs.8490204
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DOI: https://doi.org/10.1057/palgrave.jibs.8490204