Definitions of main variables
| Variable | Definitions |
|---|---|
| Corporate governance variables | |
| Shareholder protection difference | The difference in the acquirer’s and target’s World Bank “Doing Business” shareholder protection index scores. Prior to taking the difference, the indexes were multiplied by the rule-of-law index constructed by the World Bank |
| Shareholder protection dispersion | A dummy variable that takes the value one if the acquirer’s index value for shareholder protection is above the global average and the target firm’s index is below it |
| Creditor protection difference | The difference in the acquirer’s and target’s World Bank “Doing Business” creditor protection index scores. Prior to taking the difference, the indexes were multiplied by the rule-of-law constructed by the World Bank |
| Creditor protection dispersion | A dummy variable that takes the value one if the acquirer’s index value for creditor protection is above the global average and the target firm’s index is below it |
| Transparency (target) | The transparency index score for the target country from the World Bank’s Doing Business reports |
| Common law (target) | A dummy variable for English rule-of-law |
| Political and economic variables | |
| Political stability | The target country’s World Bank’s Worldwide Governance Indicator index score |
| Economic freedom (target) | An index on freedom of trade constructed by the Heritage Foundation and The Wall Street Journal |
| Market value/GDP (target) | Cumulative market value of all listed firms divided by the GDP of the target country |
| GDP growth (target) | Percentage of annual GDP growth |
| GDP/capita (target) | Logarithm of the target country’s GDP (in US dollars) per capita |
| Urbanization (target) | Percentage growth rate of the target country’s urban population |
| Cultural variables | |
| Cultural difference | Hofstede’s six dimensional cultural distance score between the acquirer and target country |
| Same language | Dummy variable equal to one if the acquirer and the target are from countries with the same official language |
| Prior presence | A dummy variable to capture whether the acquirer has made prior acquisitions of African firms during the study period |
| Control variables | |
| ln of acquirer size (million $) | The logarithmic market value of the acquiring firm |
| Market-to-book (acquirer) | The market value of the acquirer’s equity over their book value |
| ROA (acquirer) | Return on assets for the acquiring firm |
| Free CF (acquirer) | The free cash flow of the acquiring firm divided by total assets |
| Cash payment | A dummy for cases where the method of payment in the acquisition was cash |
| Target listed | Target listed is a dummy for a listed takeover target |
| Diversification | A dummy that takes the value of one if the acquirer and the target are in different sectors defined on the basis of the two first NAICS sector codes |
| Variable | Definitions |
|---|---|
| Shareholder protection difference | The difference in the acquirer’s and target’s World Bank “Doing Business” shareholder protection index scores. Prior to taking the difference, the indexes were multiplied by the rule-of-law index constructed by the World Bank |
| Shareholder protection dispersion | A dummy variable that takes the value one if the acquirer’s index value for shareholder protection is above the global average and the target firm’s index is below it |
| Creditor protection difference | The difference in the acquirer’s and target’s World Bank “Doing Business” creditor protection index scores. Prior to taking the difference, the indexes were multiplied by the rule-of-law constructed by the World Bank |
| Creditor protection dispersion | A dummy variable that takes the value one if the acquirer’s index value for creditor protection is above the global average and the target firm’s index is below it |
| Transparency (target) | The transparency index score for the target country from the World Bank’s Doing Business reports |
| Common law (target) | A dummy variable for English rule-of-law |
| Political stability | The target country’s World Bank’s Worldwide Governance Indicator index score |
| Economic freedom (target) | An index on freedom of trade constructed by the Heritage Foundation and |
| Market value/GDP (target) | Cumulative market value of all listed firms divided by the GDP of the target country |
| GDP growth (target) | Percentage of annual GDP growth |
| GDP/capita (target) | Logarithm of the target country’s GDP (in US dollars) per capita |
| Urbanization (target) | Percentage growth rate of the target country’s urban population |
| Cultural difference | Hofstede’s six dimensional cultural distance score between the acquirer and target country |
| Same language | Dummy variable equal to one if the acquirer and the target are from countries with the same official language |
| Prior presence | A dummy variable to capture whether the acquirer has made prior acquisitions of African firms during the study period |
| ln of acquirer size (million $) | The logarithmic market value of the acquiring firm |
| Market-to-book (acquirer) | The market value of the acquirer’s equity over their book value |
| ROA (acquirer) | Return on assets for the acquiring firm |
| Free CF (acquirer) | The free cash flow of the acquiring firm divided by total assets |
| Cash payment | A dummy for cases where the method of payment in the acquisition was cash |
| Target listed | Target listed is a dummy for a listed takeover target |
| Diversification | A dummy that takes the value of one if the acquirer and the target are in different sectors defined on the basis of the two first NAICS sector codes |
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