Acquirer ownership concentration and foreign ownership structure: A study of Brazilian firms

Cai, Yingdan; Gubbi, Sathyajit; van Veen, Kees; van Ees, Hans

Abstract

This paper examines the effects of ownership structures of the parent on equity ownership choices in foreign acquisitions. Little is known in the context of emerging markets whether heterogeneity in acquiring firm ownership characteristics will affect agency costs between the owners and managers and lead to different equity-mode ownership strategies in foreign markets. We conceive ownership concentration and business group affiliation as responses to weak external monitoring and other market failures in emerging markets. An examination of 317 cross-border acquisitions by Brazilian acquiring firms in different host countries suggests that acquirer ownership concentration, business group affiliation as well as the joint effects of the two factors all appear to be correlated with lower equity ownership in the foreign target firm.

• Presentation Conference Type: Conference Paper (unpublished)
• Conference Name: Academy of International Business 2016 Annual Conference
• Start Date: Jun 27, 2016
• End Date: Jun 30, 2016
• Acceptance Date: Mar 16, 2016
• Publication Date: Jan 1, 2016
• Peer Reviewed: Peer Reviewed
• Keywords: ownership concentration, business group affiliation, entry mode, cross-border M&As, emerging market firm, Brazil
• Public URL: https://uwe-repository.worktribe.com/output/917496
• Publisher URL: https://aib.msu.edu/events/2016/
• Additional Information: Title of Conference or Conference Proceedings : Academy of International Business 2016 Annual Conference