TY - JOUR AU - Ellis,Jesse AU - Moeller,Sara B. AU - Schlingemann,Frederik P. AU - Stulz,René M. TI - Globalization, Governance, and the Returns to Cross-Border Acquisitions JF - National Bureau of Economic Research Working Paper Series VL - No. 16676 PY - 2011 Y2 - January 2011 UR - http://www.nber.org/papers/w16676 L1 - http://www.nber.org/papers/w16676.pdf N1 - Author contact info: Jesse Ellis Katz Graduate School of Business University of Pittsburgh 219 Mervis Hall Pittsburgh, PA 15260 E-Mail: jellis@katz.pitt.edu Sara B. Moeller Katz Graduate School of Business University of Pittsburgh 360 Mervis Hall Pittsburgh, PA 15260 E-Mail: sbmoeller@katz.pitt.edu Frederik P. Schlingemann Katz Graduate School of Business University of Pittsburgh 372 Mervis Hall Pittsburgh, PA 15260 E-Mail: schlinge@katz.pitt.edu Rene M. Stulz The Ohio State University Fisher College of Business 806A Fisher Hall Columbus, OH 43210-1144 Tel: 614/292-1970 Fax: 614/292-2359 E-Mail: stulz_1@cob.osu.edu AB - Using a sample of control cross-border acquisitions from 61 countries from 1990 to 2007, we find that acquirers from countries with better governance gain more from such acquisitions and their gains are higher when targets are from countries with worse governance. Other acquirer country characteristics are not consistently related to acquisition gains. For instance, the anti-self-dealing index of the acquirer has opposite associations with acquirer returns depending on whether the acquisition of a public firm is paid for with cash or equity. Strikingly, global effects in acquisition returns are at least as important as acquirer country effects. First, the acquirer’s industry and the year of the acquisition explain more of the stock-price reaction than the country of the acquirer. Second, for acquisitions of private firms or subsidiaries, acquirers gain more when acquisition returns are high for acquirers from other countries. We find strong evidence that better alignment of interests between insiders and minority shareholders is associated with greater acquirer returns and weaker evidence that this effect mitigates the adverse impact of poor country governance. ER -