TY - JOUR

T1 - M&A deals completion and abandonment by Russian MNE

AU - Ermolaeva, Lyubov

N1 - Eermolaeva, L. M&A deals completion and abandonment by Russian MNE / L. Ermolaeva // International Journal of Emerging Markets. - 2019. - Volume 14, Issue 3. - P. 475-494. Publisher Copyright:© 2019, Emerald Publishing Limited.

PY - 2019/7/17

Y1 - 2019/7/17

N2 - Purpose: The purpose of this paper is to reveal how the host and the home countries’ formal institutions may affect mergers and acquisitions (M&A) abandonment by Russian multinational enterprises (MNEs), and how MNE industry can influence the results. The second objective of the study is to have a separate look at the negative experience, and to uncover its influence on M&A deal completion. Design/methodology/approach: In the study, a sample of 446 international M&A deals initiated by Russian MNEs in the period of 2000–2014 is empirically tested by means of logistic regression analysis. Findings: The empirical analysis indicates that better business environment in the host country is crucially important whereas development of business freedom at home may make the international M&A less attractive and increases the likelihood of M&A deal abandonment. Thus, the larger the institutional distance by this indicator the more likelihood the deal is completed. Contrary results are implied for property rights: the larger the distance between Russia and host country, the lower likelihood of M&A deal completion. Failure experience decreases the likelihood of acquisition completion whereas international experience increases. Research limitations/implications: The study has number of limitations: individual-level variables were not included in the model; and a limited number of factors were tested due to availability of data and moderate sample size. Practical implications: The study indicates that better development of business freedom and moderate property rights protection in the host country are the most favorable factors for an M&A deal completion. Russian policymakers should realize that development of property rights protection in Russia ensures success of MNEs abroad, and development of business freedom reduces the outflow of capital from the economy. Originality/value: The paper makes several theoretical and practical contributions: it contributes to institutional international business literature, indicating in which particular cases institutional distance has positive or negative effect on M&A completion. It also contributes to organizational learning literature, confirming that failures inhibit learning, and firms tend to repeat previous mistakes. Finally, the paper widens the scarce research on Russian MNEs, and on the role of the home country institutions for MNE’s behavior abroad.

AB - Purpose: The purpose of this paper is to reveal how the host and the home countries’ formal institutions may affect mergers and acquisitions (M&A) abandonment by Russian multinational enterprises (MNEs), and how MNE industry can influence the results. The second objective of the study is to have a separate look at the negative experience, and to uncover its influence on M&A deal completion. Design/methodology/approach: In the study, a sample of 446 international M&A deals initiated by Russian MNEs in the period of 2000–2014 is empirically tested by means of logistic regression analysis. Findings: The empirical analysis indicates that better business environment in the host country is crucially important whereas development of business freedom at home may make the international M&A less attractive and increases the likelihood of M&A deal abandonment. Thus, the larger the institutional distance by this indicator the more likelihood the deal is completed. Contrary results are implied for property rights: the larger the distance between Russia and host country, the lower likelihood of M&A deal completion. Failure experience decreases the likelihood of acquisition completion whereas international experience increases. Research limitations/implications: The study has number of limitations: individual-level variables were not included in the model; and a limited number of factors were tested due to availability of data and moderate sample size. Practical implications: The study indicates that better development of business freedom and moderate property rights protection in the host country are the most favorable factors for an M&A deal completion. Russian policymakers should realize that development of property rights protection in Russia ensures success of MNEs abroad, and development of business freedom reduces the outflow of capital from the economy. Originality/value: The paper makes several theoretical and practical contributions: it contributes to institutional international business literature, indicating in which particular cases institutional distance has positive or negative effect on M&A completion. It also contributes to organizational learning literature, confirming that failures inhibit learning, and firms tend to repeat previous mistakes. Finally, the paper widens the scarce research on Russian MNEs, and on the role of the home country institutions for MNE’s behavior abroad.

KW - Home country factors

KW - Host country factors

KW - Institutions

KW - Mergers and acquisitions completion

KW - Negative experience

KW - Russian MNEs

KW - SCOPUS

UR - http://www.scopus.com/inward/record.url?scp=85066843848&partnerID=8YFLogxK

U2 - 10.1108/IJOEM-05-2016-0140

DO - 10.1108/IJOEM-05-2016-0140

M3 - Article

AN - SCOPUS:85066843848

VL - 14

SP - 475

EP - 494

JO - International Journal of Emerging Markets

JF - International Journal of Emerging Markets

SN - 1746-8809

IS - 3

ER -