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Location Advantages, Governance Quality, Stock Market Development and Firm Characteristics as Antecedents of African M&As

Tunyi, Abongeh A. and Ntim, Collins G. (2016) Location Advantages, Governance Quality, Stock Market Development and Firm Characteristics as Antecedents of African M&As. Journal of International Management, 22 (2). pp. 147-167. ISSN 1075-4253

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This study explores firm- and country-specific antecedents of African M&As. We use one of the largest datasets to-date consisting of 1,490 unique African firms (11,183 firm-year observations) from 1996 to 2012. Our results suggest that improvements in time-varying country-level factors, including location advantages (market size, human capital and efficiency opportunities), national governance quality, and stock market development are associated with an increase in the volume of M&A activity. Consistent with the resource-curse paradox, high resource endowments are not associated with increased levels of M&A. In support of the management inefficiency but contrary to the traditional firm size hypotheses, African targets are generally characterised by declining stock returns and accounting profitability but are more likely to be larger firms; suggesting the presence of information asymmetry concerns in their selection. Notwithstanding, we find evidence of heterogeneity across countries with inconsistent support for established target prediction hypotheses. A model which combines firm- and country- specific factors better explains observed variations in African M&A activity.

Item Type: Article
Uncontrolled Keywords: national governance quality, location advantages, stock market development, firm characteristics, mergers and acquisitions, Africa
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance
H Social Sciences > HJ Public Finance
Schools: Huddersfield Business School > Financial Ethics and Governance Research Group
Huddersfield Business School
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Depositing User: Collins Ntim
Date Deposited: 01 Feb 2016 14:10
Last Modified: 28 Aug 2021 17:27


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