USF St. Petersburg campus Faculty Publications
The market effects of acquisition-related foreign direct investments in the U.S.
Document Type
Article
Publication Date
1992
ISSN
1062-9408
Abstract
Theories of foreign direct investment (FDI) indicate that both location and firm specific advantages must be present for FDI to be feasible. These advantages can be readily exploited by expansion through the utilization of external markets. Therefore, international acquisitions can best be explained by the perceived benefits associated with internalization. Acquisitions allow bidders to capture partially the gains associated with internalization of markets for their products and services, and to partially distribute them to target firm shareholders. The results of this study support the hypothesis that target shareholders receive abnormal positive returns. However, returns to bidder stockholders are zero, indicating that either investors do not price positively the benefits of FDI, or that costs associated with managerial perquisites, the winner’s curse, and ineffective utilization of free cash flow outweigh positive FDI benefits.
Language
en_US
Publisher
Elsevier
Recommended Citation
Mathur, I., Rangan, N., Chhachhi, I., & Sundaram, S. (1992). The market effects of acquisition-related foreign direct investments in the U.S. North American Journal of Economics and Finance, 3, 39-49. doi: 10.1016/1062-9408(92)90011-F
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Comments
Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.