Mitigating post-acquisition risk: the interplay of cross-border uncertainties

摘要

Do international acquisitions increase acquirers' risk? If so, can cross-border uncertainties interact and offset such risk? The perspective of integrated risk management suggests international acquirers could mitigate their overall risk through the interplay of various levels of uncertainties. Using asset pricing to measure shifts in risk and a large sample of international acquisitions by US firms during 2000-2014, we find that acquirers can reduce their risk by trading internal and deal-level risk factors (information asymmetry and moral hazard) off against external and country-level risk factors ("liability of foreignness" and "double-layered acculturation").