The Geography of Block Acquisitions

Using a large sample of partial block acquisitions, we examine the importance of geographic proximity in corporate governance and target returns. We find that block acquirers have a strong preference for geographically proximate targets and acquirers that purchase shares in such targets are more lik...

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Bibliographic Details
Published in:The Journal of finance (New York) 2008-12, Vol.63 (6), p.2817-2858
Main Authors: KANG, JUN-KOO, KIM, JIN-MO
Format: Article
Language:English
Subjects:
Acquired shares
Acquisitions & mergers
Corporate governance
Economic geography
Financial analysis
Geography
Information asymmetry
Investment companies
Investors
Rates of return
Shares outstanding
Statistical median
Stock exchange
Stock returns
Studies
Target acquisitions
Trade volume
Variable coefficients
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Summary:Using a large sample of partial block acquisitions, we examine the importance of geographic proximity in corporate governance and target returns. We find that block acquirers have a strong preference for geographically proximate targets and acquirers that purchase shares in such targets are more likely to engage in post-acquisition target governance activities than are remote block acquirers. Moreover, the targets of these acquirers realize higher announcement returns and better post-acquisition operating performance than do targets of other types of acquirers, particularly when they face greater information asymmetries.
ISSN:0022-1082
1540-6261
DOI:10.1111/j.1540-6261.2008.01414.x