Regression with CAR[−1, +1] and shareholder protection
| (1) | (2) | (3) | (4) | (5) | (6) | |
|---|---|---|---|---|---|---|
| Corporate governance | ||||||
| Shareholder protection difference × minority acquisition | 1.71 (0.78) | 1.636 (0.74) | ||||
| Shareholder protection difference × majority acquisition | 2.385 (1.19) | 2.546 (1.26) | ||||
| Shareholder protection difference × 100% acquisition | 4.564** (2.05) | 4.466** (1.99) | ||||
| Transparency | 1.007 (0.36) | 1.293 (0.46) | 1.108 (0.4) | 2.391 (0.72) | 2.422 (0.73) | 2.259 (0.68) |
| Common law | 2.066* (1.7) | 2.132* (1.77) | 2.167* (1.79) | 0.921 (0.58) | 1.115 (0.69) | 1.212 (0.75) |
| Politics and economics | ||||||
| Political Stability | 1.033 (0.34) | 0.625 (0.21) | 0.263 (0.09) | |||
| Economic freedom | 5.72 (0.72) | 7.005 (0.94) | 6.627 (0.89) | |||
| Market value/GDP | −0.007 (−0.62) | −0.008 (−0.72) | −0.005 (−0.48) | |||
| GDP growth | 0.086 (0.46) | 0.089 (0.48) | 0.086 (0.47) | 0.03 (0.15) | 0.037 (0.18) | 0.035 (0.18) |
| Urbanization | 0.786 (1.43) | 0.943* (1.68) | 0.998* (1.77) | |||
| Cultural variables | ||||||
| Cultural difference | −0.122 (−0.3) | −0.129 (−0.32) | −0.188 (−0.44) | |||
| Same language | 0.017 (0.02) | 0.136 (0.17) | 0.092 (0.12) | |||
| Prior presence | −0.349 (−0.46) | −0.187 (−0.25) | −0.323 (−0.42) | −0.323 (−0.43) | −0.156 (−0.21) | −0.278 (−0.37) |
| Control variables | ||||||
| Acquirer size | −0.844*** (−4.81) | −0.855*** (−4.7) | −0.858*** (−4.71) | −0.873*** (−4.83) | −0.847*** (−4.74) | −0.848*** (−4.73) |
| Market-to-book | −0.478 (−1.32) | −0.46 (−1.27) | −0.461 (−1.31) | −0.502 (−1.37) | −0.486 (−1.34) | −0.485 (−1.37) |
| ROA | 0.023 (1.48) | 0.023 (1.47) | 0.022 (1.38) | 0.024 (1.57) | 0.024 (1.56) | 0.023 (1.46) |
| Free CF | −0.033** (−2.1) | −0.033** (−2.09) | −0.032** (−2.05) | −0.033** (−2.07) | −0.320** (−2.04) | −0.031** (−2.01) |
| Cash payment | −0.151 (−0.21) | −0.204 (−0.29) | −0.018 (−0.03) | −0.117 (−0.17) | −0.189 (−0.27) | −0.027 (−0.04) |
| Target listed | −0.156 (−0.22) | −0.301 (−0.44) | −0.149 (−0.21) | −0.298 (−0.43) | −0.447 (−0.66) | −0.27 (−0.39) |
| Diversification | −1.381* (−1.66) | −1.234 (−1.48) | −1.315 (−1.59) | −1.403* (−1.68) | −1.255 (−1.5) | −1.334 (−1.6) |
| Intercept | 12.219 (3.64) | 11.561 (3.43) | 10.855 (3.41) | 6.632 (1.04) | 5.744 (0.95) | 5.124 (0.87) |
| Fixed effects (year, country, industry) | Yes | Yes | Yes | Yes | Yes | Yes |
| Number of observations | 415 | 415 | 415 | 415 | 415 | 415 |
| F-value | 1.51** | 1.52** | 1.50** | 1.45** | 1.45** | 1.46** |
| R2 | 0.174 | 0.175 | 0.182 | 0.178 | 0.18 | 0.186 |
| (1) | (2) | (3) | (4) | (5) | (6) | |
|---|---|---|---|---|---|---|
| Shareholder protection difference × minority acquisition | 1.71 (0.78) | 1.636 (0.74) | ||||
| Shareholder protection difference × majority acquisition | 2.385 (1.19) | 2.546 (1.26) | ||||
| Shareholder protection difference × 100% acquisition | ||||||
| Transparency | 1.007 (0.36) | 1.293 (0.46) | 1.108 (0.4) | 2.391 (0.72) | 2.422 (0.73) | 2.259 (0.68) |
| Common law | 0.921 (0.58) | 1.115 (0.69) | 1.212 (0.75) | |||
| Political Stability | 1.033 (0.34) | 0.625 (0.21) | 0.263 (0.09) | |||
| Economic freedom | 5.72 (0.72) | 7.005 (0.94) | 6.627 (0.89) | |||
| Market value/GDP | −0.007 (−0.62) | −0.008 (−0.72) | −0.005 (−0.48) | |||
| GDP growth | 0.086 (0.46) | 0.089 (0.48) | 0.086 (0.47) | 0.03 (0.15) | 0.037 (0.18) | 0.035 (0.18) |
| Urbanization | 0.786 (1.43) | |||||
| Cultural difference | −0.122 (−0.3) | −0.129 (−0.32) | −0.188 (−0.44) | |||
| Same language | 0.017 (0.02) | 0.136 (0.17) | 0.092 (0.12) | |||
| Prior presence | −0.349 (−0.46) | −0.187 (−0.25) | −0.323 (−0.42) | −0.323 (−0.43) | −0.156 (−0.21) | −0.278 (−0.37) |
| Acquirer size | − | − | − | − | − | − |
| Market-to-book | −0.478 (−1.32) | −0.46 (−1.27) | −0.461 (−1.31) | −0.502 (−1.37) | −0.486 (−1.34) | −0.485 (−1.37) |
| ROA | 0.023 (1.48) | 0.023 (1.47) | 0.022 (1.38) | 0.024 (1.57) | 0.024 (1.56) | 0.023 (1.46) |
| Free CF | − | − | − | − | − | − |
| Cash payment | −0.151 (−0.21) | −0.204 (−0.29) | −0.018 (−0.03) | −0.117 (−0.17) | −0.189 (−0.27) | −0.027 (−0.04) |
| Target listed | −0.156 (−0.22) | −0.301 (−0.44) | −0.149 (−0.21) | −0.298 (−0.43) | −0.447 (−0.66) | −0.27 (−0.39) |
| Diversification | − | −1.234 (−1.48) | −1.315 (−1.59) | − | −1.255 (−1.5) | −1.334 (−1.6) |
| Intercept | 12.219 (3.64) | 11.561 (3.43) | 10.855 (3.41) | 6.632 (1.04) | 5.744 (0.95) | 5.124 (0.87) |
| Fixed effects (year, country, industry) | Yes | Yes | Yes | Yes | Yes | Yes |
| Number of observations | 415 | 415 | 415 | 415 | 415 | 415 |
| 1.51** | 1.52** | 1.50** | 1.45** | 1.45** | 1.46** | |
| 0.174 | 0.175 | 0.182 | 0.178 | 0.18 | 0.186 | |
Notes: t-values are in parentheses. The dependent variable is CAR[−1, +1]. Shareholder protection difference is the difference between bidder and acquirer country shareholder protection. The control variables, Tobin’s Q, ROA and free cash flow margin, are winsorized at the 1st and 99th percentiles. The variables are defined in Table AI. All models contain year, country and industry dummies. *,**,***Significant at the 10, 5 and 1 percent of levels (italic faced), respectively
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