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Cross-border acquisition performance of developing country multinationals: The effect of institutional distance
|Issue Date: ||2020-08-03 17:24:17 (UTC+8)|
This study analyzes the impact of institutional distance on developing country company’s acquisition performance. The sample comprises 2210 cross-broader acquisitions by developing country companies from 2006 to 2018. To measure institutional distance, I used World Bank’s The Worldwide Governance Indicators, which comprise six dimensions that evaluate the governance environment and law system of each country. In my sample, the average scores of the indicators of target countries are higher than those of the acquirer’s countries. This means that developing country companies mostly take over targets in countries with more stable institutional environments. According to the results by event study, institutional distance has a significant U-shaped relationship with the acquisition performance. This result represents that institutional distance has both positive and negative effects on developing country company’s acquisition performance. When companies take time to adapt to the institutionally different environments, and may incur additional costs that would reduce their value. However, when they operate in more stable institutional environment, they will have lower costs and risks, and be more efficient in engaging in economic activities. And the learning effects will also be strong when companies acquire targets in stable institutional environment. Taking both negative and positive effects of institutional distances together, my empirical finding shows that when the institutional distance is lower than a certain level, the negative effect will surpass the positive effect. However, when the institutional distance reaches to a certain level, the positive effect will outweigh the negative effect.
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|Source URI: ||http://thesis.lib.nccu.edu.tw/record/#G0107351026|
|Data Type: ||thesis|
|Appears in Collections:||[國際經營與貿易學系 ] 學位論文|
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