Studies on Decision-making Model of Cross-border Acquisitions:Applying Real Options

• Main Authors: Chih-Wei Chen, 陳志威
• Other Authors: Tyrone, Tar-Jung Lin
• Format: Others
• Language: en_US
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/rh3jg2

碩士 === 國立東華大學 === 國際企業學系 === 96 === This study constructs a mathematical decision-making model of cross-border acquisitions by means of the real options approach. 　It is assumed that a domestic acquiring firm determines to purchase the equity of the foreign acquired firm in the mode of a cash offer with the increased uncertain revenue of bi-national firms. 　This proposed model is used to estimate the potential strategic value before acquisition and the real post-acquisition value expected during the period of the cross-border acquisition case. 　Then the model proceeds to follow the relative currencies ratio (the effect of wealth transfer) of bi-national firms to determine the thresholds for the domestic acquiring firm and the foreign acquired firm to analyze the optimal decision-making timing to accomplish those thresholds for each firm. In addition, this study analyzes the mechanism of fluctuation of exchange rate which is provided with the property of mean-reverting process, and such an extension of converting the cash flow of revenue of the foreign acquired firm is based on the domestic currency value. Also, as presented herein, this study makes use of the concept of expected time to calculate the pre-acquisition and post-acquisition values from two different perspectives of the domestic acquiring firm and the foreign acquired firm. For the purpose of building a flexible decision-making criterion of cross-border acquisitions, this research aims not merely to address how the domestic acquiring firm determines a decision-making threshold, but why the foreign acquired firm is willing to be purchased. In addition, this research further negotiates and generates a different evaluation mode of cross-border acquisitions for domestic firms as a reference criterion for confronting the cross-border acquisition case, based on the different decision thresholds made by the domestic acquiring firm and the foreign acquired firm.