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dc.contributor.authorAhmed, Y.*
dc.contributor.authorElshandidy, Tamer*
dc.date.accessioned2017-09-15T12:46:21Z
dc.date.available2017-09-15T12:46:21Z
dc.date.issued2018-04
dc.identifier.citationAhmed Y and Elshandidy T (2018) Why do over-deviated firms from target leverage undertake foreign acquisitions? International Business Review. 27(2): 309-327.en_US
dc.identifier.urihttp://hdl.handle.net/10454/13201
dc.descriptionYesen_US
dc.description.abstractThis paper examines how deviation from firms’ target leverage influences their decisions on undertaking foreign acquisitions. Using a sample of 5,746 completed bids by UK acquirers from 1987 to 2012, we observe that over-deviated firms are more likely to acquire foreign targets. Consistent with co-insurance theory, we find that over-deviated firms engage in foreign acquisition deals to relieve their financial constraints and to mitigate their financial distress risk. We also note that foreign acquisitions enhance over-deviated firms’ value and performance, measured by Tobin’s q and return on assets (ROA) respectively. These findings support the view that over-deviated firms pursue the most value-enhancing acquisitions. Overall, this paper suggests that co-insurance effects, value creation and performance improvements are the main incentives for over-deviated firms’ involvement in foreign acquisitions.en_US
dc.language.isoenen_US
dc.relation.isreferencedbyhttps://doi.org/10.1016/j.ibusrev.2017.08.005en_US
dc.rights© 2017 Elsevier. Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license (http://creativecommons.org/licenses/by-nc-nd/4.0/)en_US
dc.subjectLeverage deviation; Co-insurance theory; Global diversification; Financial constraints; Default risk; Firm value; Operating performanceen_US
dc.titleWhy do over-deviated firms from target leverage undertake foreign acquisitions?en_US
dc.status.refereedYesen_US
dc.date.Accepted2017-08-21
dc.date.application2017-08-30
dc.typeArticleen_US
dc.type.versionAccepted Manuscripten_US
refterms.dateFOA2019-03-01T00:00:00Z


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