Cross border mergers and acquisitions and default risk

Koerniadi, H
Krishnamurti, C
Tourani Rad, A
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The Indonesian Financial Management Association (IFMA)

Using a cross-country sample of mergers and acquisitions, we examine the role of cultural, institutional, geographic and managerial factors on post-merger default risk. We find that cultural factors, especially the relative difference in uncertainty avoidance between the acquiring and target country, play a significant role in affecting post-merger default risk. Furthermore, we find that institutional quality affects the post-merger default risk of acquiring firms. In contrast to the prior research we do not find any evidence indicating that managerial incentives drive post-merger default risk changes. Also, we do not find any evidence indicating the relevance of geographic distance on default risk.

Cross-border mergers , Default risk , Idiosyncratic risk
The First International Conference on Finance and Banking held at Grand Inna Bali Hotel, Bali, Indonesia, 2013-12-11 to 2013-12-12
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