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Article: A real options perspective on sequential acquisitions in China

TitleA real options perspective on sequential acquisitions in China
Authors
KeywordsChina
Diversification
Private firms
Real options
Sequential acquisition
Toehold
Issue Date2010
PublisherPalgrave Macmillan Ltd. The Journal's web site is located at http://www.palgrave-journals.com/jibs/index.html
Citation
Journal Of International Business Studies, 2010, v. 41 n. 1, p. 166-174 How to Cite?
AbstractWe examine how firms in an emerging market address their information disadvantage in takeovers. One strategy is to complete the acquisition sequentially rather than as a one-time deal. In contrast to firms in developed economies that enjoy relatively easy access to information, emerging-market firms face differential access to information on target firms, owing to institutional weaknesses and constraints in those markets. Sequential acquisitions are conceptualized as a real-option-based strategy, whereby the sequential acquirer resolves valuation uncertainty through information gathering and learning after making a toehold purchase. The value of a sequential acquisition strategy increases for firms that are at an information disadvantage. Statistical analysis, based on 272 completed acquisitions of Chinese listed firms between 1995 and 2003, shows that the sequential method is more likely to be chosen over a single-transaction mode when the acquirer is a private firm, or when the acquirer is diversifying into a new business area. Thus we offer a new way of viewing real option strategies in emerging economies, by treating sequential acquisitions as information and learning mechanisms as opposed to tools for hedging. © 2010 Academy of International Business.
Persistent Identifierhttp://hdl.handle.net/10722/60203
ISSN
2015 Impact Factor: 3.62
2015 SCImago Journal Rankings: 4.208
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorXu, Den_HK
dc.contributor.authorZhou, Cen_HK
dc.contributor.authorPhan, PHen_HK
dc.date.accessioned2010-05-31T04:05:50Z-
dc.date.available2010-05-31T04:05:50Z-
dc.date.issued2010en_HK
dc.identifier.citationJournal Of International Business Studies, 2010, v. 41 n. 1, p. 166-174en_HK
dc.identifier.issn0047-2506en_HK
dc.identifier.urihttp://hdl.handle.net/10722/60203-
dc.description.abstractWe examine how firms in an emerging market address their information disadvantage in takeovers. One strategy is to complete the acquisition sequentially rather than as a one-time deal. In contrast to firms in developed economies that enjoy relatively easy access to information, emerging-market firms face differential access to information on target firms, owing to institutional weaknesses and constraints in those markets. Sequential acquisitions are conceptualized as a real-option-based strategy, whereby the sequential acquirer resolves valuation uncertainty through information gathering and learning after making a toehold purchase. The value of a sequential acquisition strategy increases for firms that are at an information disadvantage. Statistical analysis, based on 272 completed acquisitions of Chinese listed firms between 1995 and 2003, shows that the sequential method is more likely to be chosen over a single-transaction mode when the acquirer is a private firm, or when the acquirer is diversifying into a new business area. Thus we offer a new way of viewing real option strategies in emerging economies, by treating sequential acquisitions as information and learning mechanisms as opposed to tools for hedging. © 2010 Academy of International Business.en_HK
dc.languageengen_HK
dc.publisherPalgrave Macmillan Ltd. The Journal's web site is located at http://www.palgrave-journals.com/jibs/index.htmlen_HK
dc.relation.ispartofJournal of International Business Studiesen_HK
dc.rightsJournal of International Business Studies. Copyright © Palgrave Macmillan Ltd.en_HK
dc.subjectChinaen_HK
dc.subjectDiversificationen_HK
dc.subjectPrivate firmsen_HK
dc.subjectReal optionsen_HK
dc.subjectSequential acquisitionen_HK
dc.subjectToeholden_HK
dc.titleA real options perspective on sequential acquisitions in Chinaen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0047-2506&volume=Online Publication&spage=&epage=&date=2009&atitle=A+real+options+perspective+on+sequential+acquisitions+in+Chinaen_HK
dc.identifier.emailXu, D: dxu@business.hku.hken_HK
dc.identifier.authorityXu, D=rp01119en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1057/jibs.2009.16en_HK
dc.identifier.scopuseid_2-s2.0-72449154599en_HK
dc.identifier.hkuros158374en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-72449154599&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume41en_HK
dc.identifier.issue1en_HK
dc.identifier.spage166en_HK
dc.identifier.epage174en_HK
dc.identifier.isiWOS:000273637300012-
dc.publisher.placeUnited Kingdomen_HK
dc.identifier.scopusauthoridXu, D=7404073938en_HK
dc.identifier.scopusauthoridZhou, C=15732247200en_HK
dc.identifier.scopusauthoridPhan, PH=6603833294en_HK
dc.identifier.citeulike6430030-

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