This paper focuses on how corruption affects an important internationalization behavior of firms: the extent of control – wholly owned subsidiary or equity participation – exercised by firms involved in cross-border mergers and acquisitions. We analyze individual data on cross-border M&A carried out by firms located in the seven largest European countries, and operating in the 10 SIC divisions. We thus consider 20,034 international M&A deals completed in 137 host countries over the period 2000–2012. We find that the relationship between the level of corruption in the host country and the firm's probability of opting for full control mode in cross-border M&A is U-shaped. Moreover, we add to the literature by demonstrating that industry relatedness between acquirer and target and the level of connectivity between home and host countries moderates the relationship between corruption in the host country and the level of control.

The effect of local corruption on ownership strategy in cross-border mergers and acquisition

DI GUARDO, MARIA CHIARA;MARROCU, EMANUELA;PACI, RAFFAELE
2016-01-01

Abstract

This paper focuses on how corruption affects an important internationalization behavior of firms: the extent of control – wholly owned subsidiary or equity participation – exercised by firms involved in cross-border mergers and acquisitions. We analyze individual data on cross-border M&A carried out by firms located in the seven largest European countries, and operating in the 10 SIC divisions. We thus consider 20,034 international M&A deals completed in 137 host countries over the period 2000–2012. We find that the relationship between the level of corruption in the host country and the firm's probability of opting for full control mode in cross-border M&A is U-shaped. Moreover, we add to the literature by demonstrating that industry relatedness between acquirer and target and the level of connectivity between home and host countries moderates the relationship between corruption in the host country and the level of control.
2016
Mergers and acquisitions; Corruption; Ownership strategy; Industry relatedness
File in questo prodotto:
File Dimensione Formato  
diguardo-marrocu-paci_JBR_2016.pdf

Solo gestori archivio

Descrizione: pdf
Tipologia: versione editoriale
Dimensione 549.46 kB
Formato Adobe PDF
549.46 kB Adobe PDF   Visualizza/Apri   Richiedi una copia
DMP_JBR 2016_iris_vqr2015-19.pdf

accesso aperto

Tipologia: versione post-print
Dimensione 237.51 kB
Formato Adobe PDF
237.51 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11584/144603
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 37
  • ???jsp.display-item.citation.isi??? 34
social impact