Cross Border Bidders Versus Domestic Ones

  • Ralf Bebenroth


This chapter investigates differences in targets overtaken by cross-border bidders versus domestic ones. The literature from the selection theory argues that there is “cherry picking.” That means, cross-border bidders overtake the comparably better performing targets in contrast to domestic bidders, which acquire weaker targets in a sort of “rescue mission.” Targets in the study were investigated to see if this statement holds true.

The results show that cross-border targets did not perform better but performed worse than domestic ones. According to my sample, I have to conclude that there is no “cherry picking” of Japanese firms at Japanes firms at cross-border acquisitions. This lends support to the idea that foreign bidders probably come to the acquisition target at a later stage. To put it differently, Japanese firms get overtaken by foreign bidders in case where no domestic firm is interested in overtaking the target. Reasons are discussed.


Foreign Direct Investment Financial Performance Foreign Investor Foreign Firm Japanese Firm 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Bandick R, Karpaty P (2007) Foreign acquisition and employment effects in Swedish Manufacturing, Working Paper Series, No. 10, Oerebro University, Sweden. ESI, p 26Google Scholar
  2. Barkema HG, Shijven M (2008) Toward unlocking the full potential of acquisitions: the role of organizational restructuring. Acad Manage J 51(4):696–722Google Scholar
  3. Barkema HG, Bell JHJ, Pennings JM (1996) Foreign entry, cultural barriers and learning. Strateg Manage J 17:151–166CrossRefGoogle Scholar
  4. Barnes P (1984) The effect of a merger on the share price of the attacker. Account Bus Res 15(57):45–50CrossRefGoogle Scholar
  5. Bebenroth R (2007) In the wave of M&A: Europe and Japan. Iudicium, MunichGoogle Scholar
  6. Bebenroth R (2010) Inbound M&A to Japan: cherry picking versus rescue mission? Kobe Econ Bus Rev 54:1–16Google Scholar
  7. Buckley PJ, Casson M (1976) The future of the multinational enterprise. MacMillan, LondonGoogle Scholar
  8. Dewenter KL (1995) Does the market react differently to domestic and foreign takeover announcements? Evidence from the U.S. chemical and retail industries. J Financial Econ 37:421–441CrossRefGoogle Scholar
  9. Eero L, Boeckerman P (2008) Analyzing the employment effects of mergers and acquisitions. J Econ Behav Organ 68:112–124CrossRefGoogle Scholar
  10. Fleming G, Johnson RS (2008) How countries are impacted by mergers and acquisitions: a theoretical approach. Virginia Econ J 13:33–40Google Scholar
  11. Fukao K, Amano T (2004) Tainichi chokusetsu toshi to nippon keizai [Direct investment in Japan and the Japanese economy]. Nihon Keizai ShinbunshaGoogle Scholar
  12. Fukao K, Murakami Y (2005) Do foreign firms bring greater total factor productivity to Japan? J Asia Pac Econ 10(2):237–254CrossRefGoogle Scholar
  13. Fukao K, Ito K, Kwon HU (2005) Do out-in M&As bring higher TFP to Japan? An empirical analysis based on micro-data on Japanese manufacturing firms. J Jpn Int Econ 19:272–301CrossRefGoogle Scholar
  14. Girma S, Goerg H (2004) Blessing or curse? Domestic plants survival and employment prospects after foreign acquisition. Appl Econ Q 50:89–110Google Scholar
  15. Goehlich R (2009) Make-or-buy decisions in aerospace organizations, Gabler edition. Wissenschaft, WiesbadenCrossRefGoogle Scholar
  16. Gregory A (1997) An examination of the long run performance of UK acquiring firms. J Bus Finance Account 24(7):971–1002CrossRefGoogle Scholar
  17. Gugler K, Yurtoglu BB (2004) The effects of mergers on company employment in the US and Europe. Int J Ind Organ 22:481–502CrossRefGoogle Scholar
  18. Hebert L, Very P, Beamish P (2005) Expatriation as a bridge over troubled water: a knowledge/based perspective applied to cross-border acquisitions. Organ Stud 26:1455–1476CrossRefGoogle Scholar
  19. Iverson RD, Pullman JA (2003) Determinants of voluntary turnover and layoffs in an environment of repeated downsizing following a merger: an event history analysis. J Manage 26(5):977–1003Google Scholar
  20. King DR, Dalton DR, Daily CM, Covin JG (2004) Meta-analyses of post-acquisition performance: indications of unidentified moderators. Strateg Manage J 25:187–200CrossRefGoogle Scholar
  21. Kogut B, Singh H (1988) The effect of national culture on the choice of entry mode. J Int Bus Stud 19:411–432CrossRefGoogle Scholar
  22. Krug JA, Hegarty WH (2001) Research notes and commentaries: predicting who stays and leaves after an acquisition: a study of top managers in multinational firms. Strateg Manage J 22:185–196CrossRefGoogle Scholar
  23. Kruse TA, Park HY, Park K, Suzuki K (2007) Long-term performance following mergers of Japanese companies: the effect of diversification and affiliation. Pac-Basin Finance J 15(2):154–172CrossRefGoogle Scholar
  24. Lee PM (1997) A comparative analysis of layoff announcements and stock price reductions in the United States and Japan. Strateg Manage J 18:879–894CrossRefGoogle Scholar
  25. Lichtenberg FG, Spiegel S (1990) The effect of ownership changes on the employment and wages of central office and other personnel. J Law Econ 33:383–408CrossRefGoogle Scholar
  26. Lin BW, Hung SC, Li PC (2006) Mergers and acquisitions as a human resource strategy—evidence from US banking firms. Int J Manpow 27(2):126–142CrossRefGoogle Scholar
  27. Mandelker G (1974) Risk and return: The case of merging firms. J Financial Econ 1:303–335CrossRefGoogle Scholar
  28. McGuckin RH, Nguyen SV (2001) The impact of ownership changes: a view from labour markets. Int J Ind Organ 19:739–762CrossRefGoogle Scholar
  29. McNamara GM, Haleblian JJ, Dykes BJ (2008) The performance implications of participating in an acquisition wave: early mover advantages, bandwagon effects, and the moderating influence of industry characteristics and acquirer tactics. Acad Manage J 1:113–130CrossRefGoogle Scholar
  30. Meshi PX, Metais E (2006) International acquisition performance and experience: a resource-based view. Evidence from French acquisitions in the United States (1988–2004). J Int Manage 12:430–448CrossRefGoogle Scholar
  31. Munoz-Bullon F (2008) Who downsizes for longer? A longitudinal analysis, Working Paper 08-28, Business Economic Series, 05 MadridGoogle Scholar
  32. Nagashima OT (2008) Inbound direct investment. Int Financial Law Rev 27(7):73–75Google Scholar
  33. Olatunji OR, Uwuigbe U (2009) Psychological effects of mergers and acquisition on employees: case study of some selected banks in Nigeria. World Rev Entrep Manage Sustain Dev 5(1):102–115Google Scholar
  34. Ornaghi C (2009) Positive assortive merging. J Econ Manage Strategy 18(2):323–46CrossRefGoogle Scholar
  35. Paprzycki R, Fukao K (2008) Foreign direct investment in Japan. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  36. Recof M & A Database, Print Issue, MARR (several issues, latest 2008) Mergers acquisition research report. Recof-data report (in Japanese)Google Scholar
  37. Recof M&A Database, Print Issue, MARR (1995–2009) Mergers acquisition research report. Recof-Data report (in Japanese)Google Scholar
  38. Rhodes-Kropf M, Robinson DT (2008) The market for mergers and the boundaries of the firm. J  Finance 63(3):1169–1211CrossRefGoogle Scholar
  39. Rosenkopf L, Almeida P (2003) Overcoming local search through alliances and mobility. Manage Sci 49(6):751–766CrossRefGoogle Scholar
  40. Rugman A (1981) Inside the multinationals: the economics of international markets. Croom Helm, LondonGoogle Scholar
  41. Schaede U (2008) Choose and focus: Japanese business strategies for the 21st century. Cornell, New YorkGoogle Scholar
  42. Shimizu K, Hitt MA, Vaidyanath D, Pisano V (2004) Theoretical foundations of cross-border mergers and acquisitions: a review of current research recommendations for the future. J Int Manage 10:307–353CrossRefGoogle Scholar
  43. Very P, Lubatkin M, Calori R (1996) A cross-national assessment of acculturative stress in recent European mergers. Int Stud Manage Organ 26:59–88Google Scholar
  44. Wilson BD (1980) The propensity of multinational companies to expand through acquisitions. J Int Bus Stud 11:59–64CrossRefGoogle Scholar
  45. WIP Japan (2014) Invest Japan. Foreign direct investment promotion. Cabinet office. Accessed 16 May 2014
  46. Yeh T, Hoshino Y (2001) Productivity and operating performance of Japanese merging firms: keiretsu-related and independent mergers. Jpn World Econ 434:1–20Google Scholar
  47. Zaheer S (1995) Overcoming the liability of foreignness. Acad Manage J 38:341–363CrossRefGoogle Scholar

Copyright information

© Springer Japan 2015

Authors and Affiliations

  1. 1.Kobe University Research Institute for Economics & Business Administration (RIEB)KobeJapan

Personalised recommendations