Résumé

This paper explores the extent to which Idiosyncratic risk of the target increases acquires shareholders wealth in cross-border takeovers. Using a sample on 15,619 cross-border takeovers, we find that cross-border add value to target firms stockholders. Our results show that the well documented superior acquirer gains in cross-border deals do not persist for firms with low idiosyncratic risk. We point out a transfer of risk from the target firm to the bidder, mainly in deals involving private target. We suggest that under information asymmetry concerning the bidder, the market reaction to a cross border deal is mainly led by the fact that acquirer’s stock is underpriced, rather than deal’s synergy potential.

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