Foreign Acquisitions and Managerial Discretion

Foreign Acquisitions and Managerial Discretion Foreign acquisitions have been growingdramatically since the 1980s despite academic studiesshowing that shareholders of acquirers generally donot realize any significant gain. In this paper, weinvestigate whether foreign acquisitions aremotivated by managerial self-interest. Logisticregressions are performed to establish a link betweenforeign acquisitions and the acquirer's free cashflow. The results show that foreign acquisitions oflow-Q firms are strongly influenced by managerialdiscretion. In addition, acquisitions of low-Q firmsare conducted without consideration of theperformance of the acquirers. Foreign acquisitions ofhigh-Q firms, however, do not representoverinvestments. Review of Quantitative Finance and Accounting Springer Journals

Foreign Acquisitions and Managerial Discretion

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Kluwer Academic Publishers
Copyright © 2001 by Kluwer Academic Publishers
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
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