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Japanese firms' overpayments for cross‐border acquisitions
Author(s) -
Bebenroth Ralf,
Ahmed Kashif
Publication year - 2021
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/infi.12387
Subject(s) - attractiveness , contrast (vision) , debt , business , monetary economics , cross country , set (abstract data type) , economics , international economics , finance , psychology , artificial intelligence , computer science , psychoanalysis , programming language
U.S. and European research suggests that firms tend to overpay when acquiring cross‐border targets. Our research focuses on an Asian setting. We find that Japanese acquirers pay significantly higher premiums for cross‐border targets than for domestic ones. We also find that, in the case of acquisitions of domestic firms, acquirers that are laden with debt or that have higher market‐to‐book ratios (which signals their attractiveness) pay lower premiums. By contrast, we find that in the case of cross‐border acquisitions, neither variable has a significant impact on premiums, which suggests that premiums are not set efficiently for cross‐border acquisitions.