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- W2550679852 abstract "Research summary: W e show that private equity ownership (“ PE backing”) of the acquirer is a signal of deal quality in cross‐border takeovers. As such, PE ‐backed acquirers experience higher announcement returns in cross‐border takeovers, but only if targets are in poor information environments. We show that PE backing is a positive market signal because of PE firms' experience and networks that result from prior deals in target countries. We document that the market correctly anticipates that operating performance of PE ‐backed acquirers increases as a result of cross‐border mergers and acquisitions ( M & A) . Managerial summary: W e study cross‐border acquisitions by acquirers that are partially owned by private equity firms (“ PE backing”). Cross‐border acquisitions are challenging as acquirers often have little information about targets. We document that investors react positively to cross‐border deals of PE ‐backed acquirers—their stock prices increase upon deal announcements. However, this is only the case if targets are in countries with poor information environments. This is because PE backing allows acquirers to access PE firms' deal experience and networks. This makes it easier to identify and evaluate good targets, making it more (less) likely that a deal eventually creates (destroys) value. Consistent with this, we find that earnings of PE ‐backed acquirers increase after buying targets in poor information environments . Copyright © 2016 John Wiley & Sons, Ltd." @default.
- W2550679852 created "2016-11-30" @default.
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- W2550679852 date "2017-01-13" @default.
- W2550679852 modified "2023-10-16" @default.
- W2550679852 title "Cross‐border mergers and acquisitions: The role of private equity firms" @default.
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- W2550679852 doi "https://doi.org/10.1002/smj.2623" @default.
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