PERFORMANCE IN CROSS-BORDER MERGERS AND ACQUISITIONS: AN EMPIRICAL ANALYSIS OF THE BRAZILIAN CASE

• Main Authors: Adriana Bruscato Bortoluzzo, Maria Pia de Siqueira Garcia, Dirk Michael Boehe, Hsia Hua
• Format: Article
• Language: English
• Published: Fundação Getulio Vargas 2014-10-01
• Series: RAE: Revista de Administração de Empresas
• Subjects: Cross-border M&A; internationalization; financial performance; institutional theory; organizational learning.
• Online Access: http://rae.fgv.br/sites/rae.fgv.br/files/performance_in_cross_border_mergers_and_acquisitions_an_empirical_analysis_of_the_brazilian_case.pdf

The purpose of this article is to investigate whether the cross-border acquisitions made by Brazilian companies over the past 15 years have improved their financial performance. Drawing on institutional, sociocultural, and organizational learning theories, this study develops and empirically tests several hypotheses on the determinants of M&A performance. The results demonstrate that the cross-border acquisition moves by Brazilian companies actually improve their financial performance. Financial performance tends to be positive when the cultural distance between the countries of the acquiring and acquired companies is low to medium and when the institutional context of the acquired company is a developed one. We also found an inverted-U shape relationship between acquiring companies’ previous international M&A experience and the performance of a new cross-border operation. These findings suggest that research on international M&As should include acquirers’ M&A experience as well as the institutional characteristics of their target countries.