Using a large sample of partial cross-border mergers and acquisitions from emerging countries, we show that these acquisitions significantly reduce the risk of the target firms and that the risk reduction is directly related to the changes in the international shareholder base and the strength of the investor right protection of the acquirer. We also find that these acquisitions are value creating because we see improvements in both the short-term and long-term risk-adjusted stock performance in target firms during the postacquisition period.

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Keywords corporate governance, cross-border mergers and acquisitions, event study, long-term performance, shareholder base, target firm risk
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Journal Emerging Markets Finance and Trade
Zhu, P. (PengCheng), & Jog, V. (2012). Impact on target firm risk-return characteristics of domestic and cross-border mergers and acquisitions in emerging markets. Emerging Markets Finance and Trade, 48(4), 79–101. doi:10.2753/REE1540-496X480405