The Effects of Cross-Border Acquisitions on the Value of Rivals : International Evidence

This paper examines the effects of horizontal cross-border mergers and acquisitions on the value of industry rivals. Using firm-level data from 45 countries during the period 1990–2020, I find that the average stock price reactions of industry rivals around deal announcements are significantly negative compared to domestic acquisitions. The stock price effects increase with relatively high market-to-book ratio competitors, with larger acquirers, and with the differences in industry specialization and investor protection between the acquirer and the target country, which is consistent with the competition hypothesis. Moreover, rivals’ returns are more negative in growing and competitive industries. Overall, the findings suggest that cross-border transactions have strong competitive effects for industry rivals relative to domestic acquisitions