M&As in Africa – effects of law and governance

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Lundqvist , A , Liljeblom , E , Löflund , A & Maury , B 2019 , ' M &As in Africa – effects of law and governance ' , International Journal of Emerging Markets , vol. 14 , no. 5 , pp. 873-898 . https://doi.org/10.1108/IJOEM-05-2018-0223

Julkaisun nimi: M&As in Africa – effects of law and governance
Tekijä: Lundqvist, Alex; Liljeblom, Eva; Löflund, Anders; Maury, Benjamin
Muu tekijä: Hanken School of Economics, Finance, Helsinki
Hanken School of Economics, Finance, Helsinki
Hanken School of Economics, Finance, Helsinki
Kuuluu julkaisusarjaan: International Journal of Emerging Markets
ISSN: 1746-8809
Tiivistelmä: Purpose The cultural and legal differences between foreign acquirers and African target firms can be substantial. There is also a large variation in cultures and legal systems within Africa. However, there is limited research on merger and acquisition (M&A) performance by foreign firms in Africa. The purpose of this paper is to fill this gap by exploring the “spillover by law” hypothesis (Martynova and Renneboog, 2008) that focuses on the influence of the external environment on the governance and performance of foreign M&As in Africa.   Design/methodology/approach The data set covers 415 M&A transactions by foreign firms in Africa during the period of 1999–2016. Dynamic data covering the country’s legal, cultural and political environment are collected from the World Bank, the Heritage Foundation and Transparency International.   Findings The authors find that the legal environment significantly affects the returns of bidders on African firms. For complete acquisitions, bidder returns are significantly higher when the bidder’s country has higher shareholder protection and higher creditor protection compared with the target firm’s country. The results show that the effects are significant when there is a full control change (including a change in the target firm’s nationality) but not in the case of partial control transfers. The results are consistent with the “spillover by law” hypothesis.   Originality/value The authors contribute to the literature on cross-border M&As by separately studying the valuation effects of full, majority and minority changes in control; by being the first study of the legal spillover effects in Africa; and by being the most extensive study of the legal determinants of the valuations of non-African acquirers of African firms.
Päiväys: 2019-07-24
Avainsanat: 511 Economics
Mergers and acquisitions
Investor protection
Legal environment
Creditor protection
2 - Hybrid open access publication channel
1 - Self archived
1- Minst en av författarna har en utländsk affiliation
1- Publicerad utomlands
0- Ingen affiliation med ett företag
AoS: Financial management, accounting, and governance


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