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Minority versus majority: The choice of acquisition in Asia‐Pacific countries
Author(s) -
Nguyen AnnNgoc,
Kernohan David,
Nguyen Tung
Publication year - 2024
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.2726
Subject(s) - leverage (statistics) , economics , terrorism , government (linguistics) , monetary economics , demographic economics , political science , machine learning , computer science , law , linguistics , philosophy
This paper examines the relationship between the financial constraints of the acquiring firms and their choice of a minority over a majority acquisition. Our findings show that the likelihood of bidders undertaking a minority acquisition increases with financial constraints, including the deviation from target capital structure, and overleverage deficit. We also find that the impacts of leverage deviation on the likelihood of bidders engaging in a minority or majority acquisition is asymmetric for underleveraged and overleveraged firms. In addition, international bidders are less likely to take a minority acquisition if the target is operating in (i) countries with a higher degree of Political Stability and Absence of Violence/Terrorism, (ii) countries with higher degree to which individuals are able to participate in selecting their government, as well as having more freedom of expression, freedom of association, and a free media. Lastly, minority acquisitions are more common in a country with a more developed market. As such, in a fluid social order it looks like acquirers really need majority control.