Corporate multinationality and acquirer returns

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Publication details

DateAccepted/In press - 4 Oct 2018
DateE-pub ahead of print - 8 Jan 2019
DatePublished (current) - 29 Jun 2020
Issue number2
Number of pages38
Pages (from-to)230-267
Early online date8/01/19
Original languageEnglish


This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and thereby, require superior managerial capabilities to succeed.

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© 2019 Accounting Foundation, The University of Sydney. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.

    Research areas

  • Corporate multinationality, Firm capabilities, Geographic diversification, M&As, Multinational corporations, UK

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