Euphoria in financial markets: how Indian companies generate value in their cross-border acquisitions
Data(s) |
14/07/2016
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Resumo |
In this paper, we investigate the effect of euphoria on returns derived by Indian companies in their cross-border acquisitions. Cognitive legitimacy generated at the country level facilitated firms in deriving higher value from internationalization. In addition, overoptimism after the legitimacy-building event led to euphoria in financial markets and short-term abnormal returns. Hence we argue that the springboard effect created by legitimacy is short-lived, as euphoria fades away over time. Using cross-border and domestic acquisitions by Indian companies during 1999-2009, and controlling for fundamental factors, both financial and non-financial, we find support for our euphoria hypothesis. Because of overoptimism, Indian companies experienced short-term abnormal returns in their cross-border acquisitions in the few years following the legitimation process, but not in later years. |
Formato |
application/pdf |
Identificador |
http://westminsterresearch.wmin.ac.uk/17364/1/RIBF2016open.pdf Rao-Nicholson, Rekha and Salaber, Julie (2016) Euphoria in financial markets: how Indian companies generate value in their cross-border acquisitions. Research in International Business and Finance, 38. pp. 494-508. ISSN 0275-5319 |
Idioma(s) |
en |
Publicador |
Elsevier |
Relação |
http://westminsterresearch.wmin.ac.uk/17364/ https://dx.doi.org/10.1016/j.ribaf.2016.07.022 10.1016/j.ribaf.2016.07.022 |
Palavras-Chave | #Westminster Business School |
Tipo |
Article PeerReviewed |