Foreign acquisitions and firm performance: The moderating role of prior foreign experience

Agyei-Boapeah, Henry

Abstract

This paper relies on a sample of 9,419 acquisitions by 1,443 UK firms during 1988 to 2014 to investigate the impact of foreign acquisitions on corporate performance. Moreover, the moderating role of firms' prior exposure to foreign markets on the foreign acquisition-performance link is explored. The paper finds that, on average, foreign acquisitions have a negative impact on corporate performance. However, the negative impact of foreign acquisitions disappears under two circumstances: (1) when domestic firms undertake foreign acquisitions; and (2) when highly experienced multinationals undertake foreign acquisitions. Collectively, the findings imply that the benefits (costs) associated with foreign acquisitions are greater (lower) for new entrants into foreign markets and for highly experienced multinationals.

Citation

Agyei-Boapeah, H. (2019). Foreign acquisitions and firm performance: The moderating role of prior foreign experience. Global Finance Journal, 42, https://doi.org/10.1016/j.gfj.2018.02.001

• Journal Article Type: Article
• Acceptance Date: Feb 7, 2018
• Online Publication Date: Feb 9, 2018
• Publication Date: 2019-11
• Deposit Date: Jul 5, 2021
• Publicly Available Date: Jul 6, 2021
• Journal: Global Finance Journal
• Print ISSN: 1044-0283
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 42
• Article Number: 100415
• DOI: https://doi.org/10.1016/j.gfj.2018.02.001
• Keywords: Internationalization; foreign acquisition; prior foreign experience; financial performance; M&A JEL classification: G32; G34 2
• Public URL: https://nottingham-repository.worktribe.com/output/5756730
• Publisher URL: https://doi.org/10.1016/j.gfj.2018.02.001