Determinants of cross-border M&As in Latin America Pablo, Eduardo

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Pablo, Eduardo
Appears In
Journal of Business Research
Investor Relations; Stockholder Relations; Business, general
Academic; Trade
To link to full-text access for this article, visit this link: Byline: Eduardo Pablo Keywords: International mergers and acquisitions; Latin America Abstract: This article analyzes the determinants of cross-border M&As in the Latin American region during the period 1998-2004. Using a unique dataset of 868 Mergers and Acquisitions (M&A) events, the study focuses attention on the effect of macroeconomic and investor protection conditions in the countries where the companies reside over the likelihood of these companies participating in a cross-border M&A transaction. The study considers the effect of company-specific variables in the likelihood of going cross-border. Univariate analysis and logistic regressions strongly support the idea that better economic and business-friendly conditions in the countries where the target operates, increase the likelihood of cross-border merger. Results show that not only is the business environment in the target country important but also in the bidder country. Lower levels of property rights protection in the acquirer country negatively affect the likelihood of a cross-border deal. Finally, the likelihood of a cross-border merger increases when the target faces higher cost of funding than the acquirer's. Author Affiliation: Instituto de Estudios Superiores de Administracion (IESA), Caracas, Venezuela A.B. Freeman School of Business, Tulane University, New Orleans, LA, United States Article Note: (footnote) [star] The author thanks Urbi Garay, Maximiliano Gonzalez, Carlos Molina, Paul Spindt, Venkat Subramaniam, and participants from IESA 2006 Annual Research Conference for helpful comments. The author thanks Maria Corina Betancourt and Valeria Pileggi for their excellent research assistance during their graduate studies at IESA.
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