Abstract
This paper aims to examine the performance of cross-border mergers and acquisitions (M&As) by emerging market multinationals (EMNCs) through multiple measures and also discover how multi-level factors jointly affect the acquisition performance. Using panel data of completed cross-border M&As initiated by companies from five major emerging economies (i.e., BRICS - Brazil, China, India, Russia, and South Africa) from 2000 to 2012, we used a market-based measure (i.e., standard event study methodology) to assess the market reaction of a particular cross-border M&A and an accounting-based measure to investigate the acquiring firm’s profitability undertaking this acquisition deal. Our empirical study has supported that cross-border M&As by EMNCs are a valuation creation strategy. In addition, by cross-fertilizing arguments from institutional theory and absorptive capacity perspective, we empirically validate that the negative relationships between country-level factors (e.g., institutional distance and cultural distance) and the performance are weakened when acquiring firms have more experience in cross-border M&As. This study enhances our understanding of how multi-level factors jointly affect the level of performance of cross-border M&As by EMNCs by different accounts.