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This study aims to find empirical evidence on the effect of cross-border acquisition (CBA) on the financial leverage of the acquirer from Asia. It also examines the moderating role of the target countries (developed or developing countries) and experience of the acquirer in the foreign market on the relationship between CBA and financial leverage.

This study uses pooled data regression using 1,073 acquisition transactions by Asian Acquirer from 2012 to 2014.

The results show that before the acquisition, the leverage level of CBA firms is higher than the domestic acquisition firms and after the acquisition. CBA firms increase their leverage. This study also shows that the increasing leverage post the CBA is lower if the target comes from developed countries rather than developing countries and acquirer’s experience in international activities does not affect the impact of CBA on acquirer’s post-acquisition financial leverage.

The study contributes to the literature by providing empirical evidence of the impact of CBA on leverage in the context of Asian countries. By contrast, most of the Asian countries are developing countries, and the institutional environment across countries in Asia is different from developed countries from other regions.

The purpose of this paper is to identify possible tax synergies from acquisitions when the acquiring firm gains a non‐debt tax shield (NDTS) not directly associated with its own past performance, or a windfall NDTS. One possible benefit of a windfall NDTS is reduced reliance on interest tax shields to lower the firm's marginal tax rate (MTR).

This paper tests the likelihood of issuing debt following acquisitions of windfall non‐debt tax attributes with logistic regressions. Both acquirers and targets are publicly held US firms. Acquisitions are completed from 1987 to 2003, and debt issues are observed following the deal. Target firm tax attributes are defined as the total tax spread, tax loss carryforward (TLCF), and the MTR.

Target firm tax spread and TLCFs are inconsequential to the acquirer's likelihood of issuing future debt, suggesting that tax synergies are relatively unimportant motives for acquisitions. As predicted, the target firm MTR is not significant to acquirer debt issues.

This paper makes several contributions. First, the notion of tax synergies from acquisitions is unresolved. This paper continues the search for tax synergies in acquisitions by examining the importance of acquired NDTS in the post‐acquisition period. Second, this paper examines the influence of NDTS on debt issuance in a post‐event framework. Third, this paper provides additional evidence that corporate managers have leverage targets.

This paper aims to review the relevant literature on mergers and acquisitions in an attempt to provide a comprehensive account of what we know about mergers and which parts of the puzzle are still incomplete.

This literature review consists of three key sections. The first part of this paper summarises the literature on the cyclical nature of mergers referred to in the literature as merger waves. The second section reviews the causes and consequences of takeovers; it first reviews the causes, or drivers, of acquisitions, while focusing on the fact that acquisitions happen in waves and then reviews the consequences of takeovers, with a predominant focus on the impacts of mergers on the economic performance of acquirers. The third part of the review summarises the theories as well as previous empirical studies on determinants of announcement returns and post-acquisition performance of combined firms.

Merger activity demonstrates a wavy pattern, i.e. mergers are clustered in industries through time. The causes suggested for this fluctuating pattern include industry and economy-level shocks, mis-valuation and managerial herding. Market reaction to announcement of acquisitions is, on average, slightly negative for acquirer stocks and significantly positive for target stocks. The combined abnormal return is positive. These findings have been consistent over several decades of investigation. The prior research also identifies a number of factors that are related to performance of acquisitions. These factors are categorised and reviewed in five different groups: acquirer characteristics, target characteristics, bid characteristics, industry characteristics and macro-environment characteristics.

This review illustrates a number of issues. Prior research is heavily biased towards gains to acquirers and factors that affect these gains. It is also biased towards finding sources of value creation through mergers, despite the fact that several theories suggest that mergers can be value-destroying. In fact, value destruction is often attributed to managers’ self-interest (agency problem) and mistakes (hubris). However, the mechanisms through which mergers destroy value are rarely addressed. Aside from that, the possibility of simultaneous creation and destruction of value in acquisitions is not often considered. Finally, after several decades of investigation, a key question is not completely answered yet: “What are the sources of value in mergers and acquisitions?”

The hospital industry is again experiencing a wave of consolidation as formerly independent hospitals are acquired by multihospital systems. The effects of these consolidations on operating costs and care quality have been researched extensively. However, in addition to these benefits, many hospitals also hope that joining a multihospital system will improve their access to capital. Improved access to capital could be a particularly important benefit for independent, not-for-profit (NFP) hospitals because these hospitals face capital constraints since they lack access to publicly issued equity. Despite being an often-cited benefit of system membership, access to capital has received little attention from researchers. We draw on financial theory to identify several mechanisms through which system membership might improve access to capital for acquired NFP hospitals. We develop and test hypotheses using data from an earlier period of hospital consolidation during which hospitals were even more financially constrained than they are at present. Using propensity score matched control hospitals, we examine changes in leverage that occurred after independent hospitals joined multihospital systems. We find evidence that system membership allows under-leveraged hospitals to increase their debt holdings, suggesting that system membership may help NFP hospitals attain an optimal capital structure.

The purpose of this paper is to explore how the acquisition experience – an acquiring firm’s experience of acquiring and integrating the resources of an acquired firm – affects the production resource efficiency of the acquiring firm.

The authors used data obtained from US manufacturing industries over the 1992–2014 period. The sample includes 784 acquisitions by 417 firms. The proposed hypotheses were tested through econometric analysis.

Results show that the acquisition experience has a positive association with production resource efficiency. The acquisition experience is most positively associated with acquiring firms’ production efficiency when they successfully accomplished previous performance outcomes. While the literature has recognized the relatedness of acquiring and acquired firms as a contextual moderator, the interaction of the related acquisition and the acquisition experience has no impact on efficiency benefits.

This study enhances the understanding of how prior acquisition experience can be leveraged by acquiring firms to gain efficiency benefits in the manufacturing industry.

Globalization, increasing intensity of competition and access to capital markets have enabled emerging market firms to explore inorganic growth through merger and acquisitions (M & A) over the past two decades. The purpose of this paper is to analyze the role of firm-specific factors on M & A propensity in Chinese technology firms.

The authors analyze data on 152 firms from Mainland China, Hong Kong and Taiwan over a period of 2001-2011 using logistic and count data regression.

The authors find that the factors that influence M & As in these firms differ from the established factors found in M & A in developed economies. Large, low-debt firms have higher acquisition propensity irrespective of their technological strength and they tend to be serial acquirer too.

The findings provide new insights into inorganic growth behavior of emerging market technology firms and indicate presence of both exploitative and exploratory motives.

Extending the proposition that boards of directors influence firms’ mergers and acquisitions (M&As), studies have investigated how board interlocks – network ties formed by directors — may shape M&A processes and outcomes. While board interlocks and M&As are two streams of research, each underpinned by voluminous studies, their cross-fertilization has been relatively limited. In this chapter, the authors take stock of prior research investigating the relationship between board interlocks and M&As. Specifically, emphasizing the network features of board interlocks, the authors highlight a connection aspect and a structure aspect of board interlocks in appreciating their effects during pre-acquisition and post-acquisition phases. Based on this framework, the authors then lay out a research agenda that can further bridge board interlocks with M&As. Overall, this chapter endeavors to integrate and expand our knowledge on the acquisition implications of board interlocks.

The financial restructuring of the US department store industry is commonly interpreted as a time of corporate excess, value‐destruction and ultimately collapse. The purpose of this paper is to re‐analyse these events using qualitative methods to understand the background to the leveraged transactions and to review the implications that their failure had for the longer term strategy and structure of the US department store industry.

The research is based on two extensive periods of fieldwork in the US when the author interviewed (n=28) many of the protagonists of the 1980s restructuring period and those who inherited the management of the bankrupt businesses in the 1990s. By adopting a qualitative perspective, we are accessing social and human perspectives of these developments as well as their wider effects.

The leveraged transactions were conceptually an appropriate attempt to centralise the structure of the industry but their execution was not possible under such extreme financial distress. However, bankruptcy protection provided the environmental conditions to realise the benefits of more efficient strategic and subsequent wide‐ranging structural change.

This research differs from economistic readings of the period that analyse changes in market value of the constituent firms and the more reactionary journalistic accounts. The paper re‐casts the failed financial restructuring in a new light, underlining the regenerative effects of Chapter 11 Bankruptcy Protection in promoting firm revival, alongside visionary leadership.

The purpose of this paper is to enlighten the intriguing process of industry asset consolidation. It is critical for firms to manage their business acquisitions strategically for survival in this industry life cycle process, which develops through multiple company mergers. The companies extensively acquiring industry assets have utilized acquisition programs consisting of both pre-acquisition strategizing and post-acquisition integration; however, the existing literature on acquisition programs focuses on post-acquisition integration activities. This study aims to bridge this gap.

This study focuses on pre-acquisition strategizing of acquisition programs and proposes a model in which an acquiring company could manage its acquisitions for industry asset consolidation over the industry evolution.

Empirically, in the multi-case study of telecommunications infrastructure companies, the authors collect an extensive set of archival records accumulated over the whole industry life-cycle, spanning more than 30 years, and they apply a qualitative data analysis to reveal strategic actions within the companies.

The discoveries elaborate on activities comprising the acquisition process model: social legitimacy, strategic alignment, resource fulfillment, consolidation pursuit and merging.

The counterintuitive findings are that the companies strived to ensure legitimacy early in the telecommunication infrastructure markets before they reached strategic alignment with their owners.

The results extend the understanding of industry asset consolidation as an organization-level phenomenon and show how contextual factors connected to industry life-cycle phases, such as regulatory regimes and financial cycles and industry evolution, influence the attributions of an acquisition program.

The purpose of this paper is to identify and investigate firm level determinants of the firm's decision on acquisition strategy.

A total of 360 firms across fast growing sectors in India, namely automobile, FMCG and pharmaceutical were selected for six years, i.e. from 2004‐2010, thus making a sample of 360 firms. Hypothesis were tested using panel logit regression and instrumental IV variable regression.

Findings suggest that earnings volatility and business group affiliation are statistically significant determinants of the firm's acquisition decision. Earnings volatility follows inverted “U” curvilinear relationship with a firm's propensity to bid for acquisition and business group affiliation is a quasi moderator, i.e. has both direct and moderating impact on earnings volatility and acquisition likelihood relationship.

Out of several manufacturing and service sectors only three fastest growing sectors are selected. Moreover, though study has been conducted in emerging market, i.e. India. For further generalization, other emerging economies should have also been selected. However, availability of data restricts scope of study.

Managers can look at strategies like acquisition to reduce their volatility. However, they have to make this decision in a prudent manner as acquisition itself is a risky strategy. Moreover, managers of stand alone firms should seek to find solutions of resource scarcity.

Determinants mentioned above have not been investigated earlier with respect to acquisition decision especially in emerging market context.