The long-run performance of cross-border acquirers: An analysis of synergy sources

This study examines the long-run stock performance of US firms conducting cross-border mergers and acquisitions and explores possible synergy sources by investigating three sets of factors: country differences, merger characteristics, and acquirers' operational variables. The results show that US cross-border acquirers underperform in the long run, a situation that does not significantly change according to country differences. Acquisitions of horizontal and private targets outperform those of non-horizontal and public targets, respectively, but underperform their non-acquiring matching firms. By contrast, acquirers with post-merger decreases in costs of goods sold (CGS) outperform their acquiring peers and non-acquiring matching sample. These results suggest that cross-border acquirers need to select targets that can drive down CGS and be cautious of merging non-horizontal and public firms, in order to create synergy gains and avoid value destruction.