Foreign vs Domestic Acquisitions on Financial Risk Reduction

Vassiliki Bamiatzi (), Georgios Efthyvoulou and Liza Jabbour ()
Additional contact information
Vassiliki Bamiatzi: Leeds University Business School, University of Leeds
Liza Jabbour: Birmingham Business School, University of Birmingham

No 2016003, Working Papers from The University of Sheffield, Department of Economics

Abstract: This paper examines the role of foreign versus domestic ownership in improving the financial health of acquired firms. In particular, it explores the impact of foreign and domestic acquisitions on financial risk reduction of acquired firms in Italy and Spain over the period 2002-2010. To estimate causal relationships, we control for selection bias by applying propensity score matching techniques. Our results indicate that foreign acquisition leads to a significant and steady reduction in financial risk. In contrast, the relationship between domestic acquisition and financial risk appears to be smaller and statistically less robust.

Keywords: financial risk; capital structure; acquisitions; foreign investment (search for similar items in EconPapers)
JEL-codes: D24 F23 O33 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-11
New Economics Papers: this item is included in nep-rmg
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http://www.sheffield.ac.uk/economics/research/serps/articles/2016_003 First version, February 2016 (application/pdf)

Related works:
Journal Article: Foreign vs domestic ownership on debt reduction: An investigation of acquisition targets in Italy and Spain (2017)
Working Paper: Foreign Acquisitions and Firm-Level Financial Risk (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2016003

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