ABSTRACT
Almost everywhere in the world the story of economic development involves FDI, from the Persian Gulf’s oil fields to Ghana’s gold mining fields, Malaysian’s rubber plantations and Spain’s telecommunications (Boateng, 2001). One dominant way by which a firm engages in business outside its national borders is through cross-border mergers and acquisitions (CBM&A). The United Nations Conference on Trade and Development (UNCTAD, 2000) reported that CBM&A account for the majority of FDI outflows. A number of reasons have been given to explain the rising proportion of CBM&A of FDI. First, CBM&A activities are seen as the most rapid and radical means of expanding and changing the economic organization of the firm, leading to swift changes in shareholder wealth (Morck et al., 1990). Parvinen and Tikkanen (2007) argue that M&A process is one of the most extensive initiatives aimed at the economic and organizational transformation of the firm. Second, UNCTAD (2000) attributes the reasons behind the surge in CBM&A in recent times to the economic reforms and liberalization around the world during the past two decades. Moreover, the creation of the regional economic and political union such as European Union (EU) has also led to a huge surge in the CBM&A activities (see Danbolt, 1995; Gugler et al., 2003).
