The competitive effects of financial and fiscal institutional arbitrage opportunities: Evidence from cross-border M&As

Valentina Fani, Dimitrija Kalanoski, Olivier Bertrand

Research output: Contribution to journalArticlepeer-review

Abstract

This study investigates whether and when differences in the financial and fiscal regulatory systems between the countries of acquirers and targets that engage in cross-border M&As influence rivals' corporate responses. Drawing on the institutional arbitrage and competitive dynamics logics, we argue that cross-border M&As that provide opportunities for financial institutional gains for the targets and fiscal institutional gains for the acquirers pose a threat to the rivals and hence provoke an increase in the number of rivals' corporate responses. Additionally, we argue that the effect of cross-border M&As providing financial and fiscal institutional arbitrage opportunities on the number of rivals' corporate responses gets stronger with rivals' awareness, motivation, and capability to respond. An analysis of a unique dataset of rivals’ corporate activities before and after large horizontal cross-border M&As of their competitors in the manufacturing industry between 1999 and 2014 provides support for our main theoretical arguments and provides some contingent considerations.

Original languageEnglish
Article number102324
JournalLong Range Planning
Volume56
Issue number3
Early online date19 Apr 2023
DOIs
Publication statusPublished - 1 Jun 2023

Keywords

  • Corporate response
  • Cross-border M&As
  • Institutional arbitrage

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