Abstract
This study examines the motives underlying foreign acquisitions of U.S. firms, estimates the extent of value creation associated with such acquisitions, and examines how total gains are shared between acquiring firms and targets. We show that the synergy hypothesis is the predominant explanation for our sample of foreign acquisitions of U.S. firms. However, the hubris hypothesis coexists with the synergy hypothesis in explaining the acquisitions in our sample that are characterized by positive total gains. The evidence is also consistent with the managerialism hypothesis for the acquisitions in our sample with negative total gains. We show that the incidence of competition is associated with higher total gains, as well as higher gains to targets.
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*Anju Seth (Ph.D., University of Michigan) is Associate Professor of Strategic Management at the University of Illinois at Urbana-Champaign. She brings a multi-disciplinary perspective to her research and has published several articles in leading journals on value creation via acquisitions, restructuring, corporate governance, joint ventures and globalization.
**Kean P. Song (Ph.D., University of Houston) is Associate Professor and Interim Department Chair at Prairie View A&M University. His research interests include international finance and investments.
***R. Richardson Pettit (Ph.D., UCLA) is the Duncan Professor of Finance at the University of Houston. Dr. Pettit's work is primarily in the area of asset pricing and financial market operations. He has published extensively in the finance journals on information signalling, insider trading and international financial markets.
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Seth, A., Song, K. & Pettit, R. Synergy, Managerialism or Hubris? An Empirical Examination of Motives for Foreign Acquisitions of U.S. Firms. J Int Bus Stud 31, 387–405 (2000). https://doi.org/10.1057/palgrave.jibs.8490913
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DOI: https://doi.org/10.1057/palgrave.jibs.8490913