Shareholder Benefits of International Diversification
Open Access
Author:
Rothermel, Sean C
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Laura B Field, Thesis Supervisor James Alan Miles, Thesis Honors Advisor
Keywords:
acquisitions shareholder value international MNC R&D
Abstract:
International diversification has become ever important in corporate strategy as pressures to globalize increase. This paper looks to explore the resulting gains in shareholder value for international acquisitions compared to their domestic counterparts by analyzing announcement returns for international and domestic acquisitions from 2003-2013. In addition, the study explores past research to explain the benefits and rationale behind buying a firm abroad. Contrary to past research, the study determines that international acquisitions have a higher mean and median return than their domestic counterparts, although not at a significant level. In addition, the study finds that R&D Intensity has a negative relationship with announcement returns for all acquisitions in this time period. Given these findings, holding equity in firms that acquire internationally does not benefit investors.
