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Many announced cross-border mergers and acquisitions (M&As) are never brought to completion despite potential negative consequences to acquirers and targets. This paper presented evidence on the dynamic effects of spatial distance and two industry-level characteristics, namely industry relatedness between the two firms and technological intensity, on the completion likelihood of cross-border M&A deals. Based on a sample of 8,489 M&A transactions we found that the completion likelihood of cross-border M&As increases with spatial distance. The effect is more pronounced for deals across technology-based industries, evidence for related deals is inconclusive.

Organizational and cultural misfits have been among the most vital factors associated with Mergers and Acquisitions (M&A) failure. Admittedly, in a foreign environment, such problems can be further amplified due to the liability of foreignness, increased information asymmetries and additional transaction costs, further hampering the success of the deal. Considering that, in 2019 alone, the value of cross-border acquisitions (CBAs) exceeded $1.2 trillion (out of $3.9 trillion of the total global M&A value), deciphering the “black box” of CBA success comes at the forefront of the academic and managerial interest. In this chapter, the authors examine a missing link on the post-acquisition performance for cross-border deals, the role of organizational slack. The authors particularly theorize that slack may benefit foreign acquirers, by sheltering them against liability of foreignness and acculturation costs; yet this benefit will be conditional upon the type of slack and the acquirer’s prior CBA experience.

Prior research on post-acquisition integration has paid little attention to the factors that influence the development of trust between the members of an acquiring firm and those of the target firm. Using a policy capturing approach, we found that five aspects of the takeover situation and the integration process affect target firm members’ trust in the acquiring firm's management: takeover friendliness, national cultural similarity, interaction history of the acquiring firm and the target firm, retained autonomy, and attractiveness of the acquiring firm's HR policies. Our findings suggest that of the five trust antecedents, the attractiveness of the acquirer's HR policies is by far the most powerful predictor of target firm members’ trust in the acquiring firm's management. The implications for post-acquisition integration research and practice are discussed.

We provide an overview of the Australian and New Zealand telecommunications markets through Telecom Corporation New Zealand's (TCNZ) acquisition of AAPT Ltd in 2000, which amounted to more than NZ$2 billion. A few years later and after writing off approximately NZ$1 billion, TCNZ is considering a sell-off at a considerable loss. We discuss the strategic reasons behind the acquisition and explain how smaller telcos are struggling to compete with the incumbent telecom in Australia. We further conduct an event study to assess the impact of the acquisition on both TCNZ's and AAPT's share prices and look at some of the post-acquisition issues.

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial factors are also important in corporate FDI decisions. The financial factors concern internal capital market strength and corporate governance and include exchange rate changes, internal and external financing cost, risk diversification, and agency costs. There is variability in the significance of financial variables depending on industries and destinations. The integrated model with both strategic and financial factors is superior to either component model in explaining FDIs. However, financial factors are no less important in explaining the prevailing FDI phenomena than strategic or operational variables.

This study uses cross-border mergers as a test of the ability of foreign directors to provide effective strategic advising. We find that firms with foreign directors on their boards are more likely to engage in cross-border mergers, pursue a higher number of cross-border mergers, and invest more in those mergers. We further determine that firms with foreign directors are more likely to undertake nondiversifying mergers, enjoy friendly mergers, and acquire privately held targets. Moreover, we find that firms with foreign directors have higher announcement period returns and pay less for their cross-border targets.

This study investigates the way in which acquisition-related human factors affect knowledge transfer in the context of Chinese cross-border M&A for strategic assets. The authors find that the process of knowledge transfer is reciprocal for revenue and cost synergies, including explicit and tacit knowledge. The establishment of joint ventures (JV) in China after the takeover boosts product-oriented knowledge transfer from overseas-acquired firms in mature markets to Chinese acquirers. The promotion of overseas synergies stimulates complementary knowledge transfer flow, which is reversely transferred from Chinese acquirers to overseas-acquired subsidiaries such as low-saving sourcing and new market applications. This study identifies three acquisition-related human factors that impact overseas knowledge senders for knowledge transfer. These human factors are implemented by Chinese strategic investors as new shareholders during the loosen integration phase. The first facilitator is all-round communication programs with top management involvement, aiming to build up constructive communication channels to boost knowledge transfer. The second facilitator is competence-based trust, which stimulates cooperation and application based on similar professional competence between Chinese acquirers and their overseas-acquired subsidiaries. The impeder is a high turnover of key skilled workers at Chinese acquirers to undermine the effectiveness of knowledge transfer.