When history matters: The effect of historical ties on the relationship between institutional distance and shares acquired. Issue 6 (December 2015)

• Record Type: Journal Article
• Authors: Kedia, Ben L.; Bilgili, Tsvetomira V.
• Is Part Of: International business review. Volume 24:Issue 6(2015:Dec.)
• Page Start: 921
• Page End: 934
• Publication Date: 2015-12
• Subjects: Caucasus -- Central Asia -- Cross-border acquisition -- Historical ties -- Institutions -- Share of equity -- Transition economies; International business enterprises -- Periodicals; 338.8805
• DOI: 10.1016/j.ibusrev.2015.01.001
• Languages: English
• ISSNs: 0969-5931

Abstract

Highlights: How does regulatory institutional distance influence shares acquired in targets? How do historical ties influence the relation between distance and shares acquired? 150 cross-border acquisitions between 1999 and 2011 by acquirers from 30 nations. Diverse effects of regulatory institutional distance dimensions on shares acquired. The strength and direction of these relationships differs if historical ties exist. Abstract: The share of equity foreign acquirers obtain in targets is relevant to important aspects of firm strategy. Drawing on institutional theory, we examine the impact of regulatory institutional distance on foreign investors' choice of percentage of shares acquired in targets in the transition post-Soviet economies of the Caucasus and Central Asia. In addition, we explore the moderating role of historical ties between the acquirer and target nations on the proposed relationship. Our sample consists of 150 cross-border acquisitions completed between 1999 and 2011 by acquirers from 30 nations. Results show differential effects of different regulatory institutional distance dimensions on the percentage of shares acquired. Furthermore, findings confirm that differences exist in acquirer preferences based on whether their country of origin shares historical ties with the target nation. The study provides new insights into the important role of history to foreign investment decisions.