When history matters: The effect of historical ties on the relationship between institutional distance and shares acquired

The share of equity foreign acquirers obtain in targets is relevant to important aspects of firm strategy. Drawing on institutional theory, we examine the impact of regulatory institutional distance on foreign investors' choice of percentage of shares acquired in targets in the transition post-Soviet economies of the Caucasus and Central Asia. In addition, we explore the moderating role of historical ties between the acquirer and target nations on the proposed relationship. Our sample consists of 150 cross-border acquisitions completed between 1999 and 2011 by acquirers from 30 nations. Results show differential effects of different regulatory institutional distance dimensions on the percentage of shares acquired. Furthermore, findings confirm that differences exist in acquirer preferences based on whether their country of origin shares historical ties with the target nation. The study provides new insights into the important role of history to foreign investment decisions.