Paying for cross-border acquisitions: The impact of prior acquirers’ decisions

By examining the premiums paid by acquiring firms in cross-border acquisitions (CBAs), this study aims to determine why they might rely on prior premium decisions in the host market rather than rigorous assessments of the deal. An information-based imitation framework offers an explanation for foreign acquirers’ premium decisions. The developed hypotheses are tested with 2350 CBAs that occurred during 1995–2008. The results show that the premium paid by acquiring firms in CBAs relates positively to prior premiums paid by foreign acquirers in that host country. This imitation behavior is influenced by both organization- and offering-level characteristics.