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Product and geographic scopes of target firm and equity control in cross‐border acquisitions: An information asymmetry perspective
Author(s) -
Gada Viswa Prasad,
Popli Manish
Publication year - 2018
Publication title -
strategic change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.527
H-Index - 16
eISSN - 1099-1697
pISSN - 1086-1718
DOI - 10.1002/jsc.2207
Subject(s) - information asymmetry , equity (law) , scope (computer science) , business , adverse selection , emerging markets , control (management) , perspective (graphical) , product (mathematics) , industrial organization , ex ante , marketing , monetary economics , economics , finance , geometry , mathematics , management , artificial intelligence , political science , computer science , law , macroeconomics , programming language
Product and geographic scopes of emerging market target firms are negatively related to extent of equity control sought by Foreign acquirers. Building on information asymmetry perspective, the current study proposes testable propositions that higher product and geographic scope of the target firm in an emerging economy exacerbate ex‐ante information asymmetry and adverse selection problems for acquirers from foreign markets and hence hinders extent of equity bought. Furthermore, we propose that acquirers’ prior experience, industry type, and ownership concentration of the target firm moderate this relationship.