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Cross-border acquisitions: Do labor regulations affect acquirer returns?

  • Ross LevineEmail author
  • Chen Lin
  • Beibei Shen
Article
  • 56 Downloads

Abstract

Do cross-country differences in labor regulations shape (1) acquiring firms’ announcement returns and post-acquisition profits, costs, and revenues from cross-border deals, (2) the selection of cross-border targets, or (3) the success rates of cross-border offers? We discover that acquiring firms enjoy smaller abnormal returns and post-deal performance gains with targets in stronger labor protection countries; acquirers are more likely to purchase labor-dependent targets in weak labor regulation countries and more likely to use cross-border acquisitions to enter new markets when targets are in stronger labor regulation countries; and offer success rates fall when targets are in stronger labor regulation countries.

Keywords

cross-border mergers and acquisitions multinational firms international business labor standards labor market regulations 

Resume

Les différences entre pays en matière de réglementation du travail influencent-elles (1) les rendements annoncés par les entreprises acquéreuses et les profits, coûts et revenus post-acquisition des opérations transfrontalières, (2) la sélection des cibles transfrontalières ou (3) les taux de réussite des offres transfrontalières ? Nous découvrons que les entreprises acquéreuses bénéficient de rendements anormaux plus faibles et de gains de performance post-acquisition avec des cibles dans les pays où la protection du travail est plus forte; les acquéreurs sont plus susceptibles d’acheter des cibles dépendant du travail dans les pays où la réglementation du travail est faible et d’utiliser les acquisitions transfrontalières pour pénétrer de nouveaux marchés lorsque les cibles sont dans des pays où la réglementation du travail est plus forte; et cela conduit à des baisses du taux de succès lorsque les cibles sont dans des pays où la réglementation du travail est plus forte.

Resumen

¿Dan forma las diferencias entre países en regulación laboral a (1) el anuncio de los rendimientos de las empresas adquirientes y las ganacias, costos, e ingresos post-adquisición de los acuerdos transfronterizos, (2) la selección de los objetivos transfronterizos en mira, o (3) las tasas de éxito de las ofertas transfronterizas?. Descubrimos que las empresas adquierntes gozan de beneficios anormales menores y ganancias de desempeño después del acuerdo con objetivos en mira en países con mayor protección laboral; los adquisidores son más propensos a comprar objetivos en mira dependientes de la mano de obra en países con regulación laboral más debil y más propensos a usar adquisiones transfrinterizas para entrar a nuevos mercados cuando los objetivos en mira están países con regulaciones laborales más fuertes; y las tasas de éxito de la oferta disminuyen cuando los objetivos en mira son en países con más alta regulación laboral.

Resumo

Diferenças nas regulações trabalhistas entre países moldam (1) a obtenção de retornos sobre anúncios pelas empresas adquirentes e lucros, custos e receitas pós-aquisição de acordos internacionais, (2) a seleção de alvos internacionais ou (3) taxas de sucesso de ofertas transfronteiriças? Descobrimos que empresas adquirentes desfrutam de retornos anormais menores e ganhos de desempenho pós-negociação com alvos em países mais fortes em proteção ao trabalho; adquirentes são mais propensos a comprar alvos dependentes de mão-de-obra em países com fraca regulação trabalhista e mais propensos a usar aquisições transfronteiriças para entrar em novos mercados quando alvos estão em países com mais forte regulação trabalhista; e as taxas de sucesso de oferta caem quando os alvos estão em países com mais forte regulação trabalhista.

摘要

劳动力监管的跨国际差异是否会影响(1)收购公司在跨境交易中的公告收益以及收购后的利润、成本和收入, (2)跨境目标的选择, 或(3)跨境报价的成功率? 我们发现, 对劳动力保护较强的国家里的目标而言, 收购公司享有较小的异常收益和交易后的业绩增长。 收购方更有可能在劳动力监管薄弱的国家购买依赖于劳动力的目标, 并且更有可能当目标在劳动力监管较强的国家时使用跨境收购进入新市场; 而且当目标在更严格的劳动力监管国家/地区时, 报价成功率下降。

Notes

ACKNOWLEDGEMENTS

We received very constructive and helpful comments from Lemma Senbet (the editor), two anonymous referees, as well as Douglas Arner, Florencio Lopez-de-Silanes, Yona Rubinstein, David Sraer, Bernard Yeung, and seminar and conference participants at the University of California, Berkeley, the University of Zurich, the Chinese University of Hong Kong, the 2015 CICF in Shenzhen, the 2015 Asian Finance Association Annual Conference in Changsha, the HKIMR–HKU International Conference on Finance, Institutions and Economic Growth, the 2015 CEIBS finance conference in Shanghai, and the SUFE Conference on Corporate Finance and Capital Markets in Shanghai. Shen acknowledges financial support from the National Natural Science Foundation of China (Grant Nos. 71802124 and 71772111) and the Shanghai Pujiang Research Grant (Grant No. 17PJC044).

Supplementary material

41267_2019_281_MOESM1_ESM.docx (222 kb)
Supplementary material 1 (DOCX 221 kb)

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Copyright information

© Academy of International Business 2019

Authors and Affiliations

  1. 1.Haas School of BusinessUniversity of CaliforniaBerkeleyUSA
  2. 2.The NBERCambridgeUSA
  3. 3.Faculty of Business and EconomicsUniversity of Hong KongPok Fu LamHong Kong
  4. 4.School of FinanceShanghai University of Finance and EconomicsShanghaiChina

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