NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Acquiring Control in Emerging Markets: Evidence from the Stock Market

Anusha Chari, Paige P. Ouimet, Linda L. Tesar

NBER Working Paper No. 10872
Issued in November 2004
NBER Program(s):   IFM   AP

When firms from developed markets acquire firms in emerging markets, market-capitalization-weighted monthly joint returns show a statistically significant increase of 1.8%. Panel data estimations suggest that the value gains from cross-border M&A transactions stem from the transfer of majority control from emerging-market targets to developed market acquirers' joint returns range from 5.8% to 7.8% when majority control is acquired. Announcement returns for acquirer and target firms estimate the distribution of gains and show a statistically significant increase of 2.4% and 6.9%, respectively. The evidence suggests that the stock market anticipates significant value creation from cross-border transactions that involve emerging-market targets leading to substantial gains for shareholders of both acquirer and target firms.

download in pdf format
   (323 K)

email paper

This paper is available as PDF (323 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10872

Users who downloaded this paper also downloaded these:
Johnson, Kochhar, Mitton, and Tamirisa Malaysian Capital Controls: Macroeconomics and Institutions
Erel, Liao, and Weisbach w15132 World Markets for Mergers and Acquisitions
Chari, Chen, and Dominguez w14786 Foreign Ownership and Firm Performance: Emerging-Market Acquisitions in the United States
Ellis, Moeller, Schlingemann, and Stulz w16676 Globalization, Governance, and the Returns to Cross-Border Acquisitions
Evenett The Cross-Border Mergers and Acquisitions Wave of the Late 1990s
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us