The influence of financial slack resources over cross-border acquisitions Online publication date: Wed, 24-Dec-2014
by Quang Vinh Khanh Tran; Ruth Rios-Morales
Global Business and Economics Review (GBER), Vol. 17, No. 1, 2015
Abstract: The purpose of this paper is to analyse the influence of financial slack resources over cross-border acquisition decisions. By using Cyert and March's behavioural and organisational learning theory, this study also examines the moderating role of firms' accumulated learning through previous acquisition experience on this relationship. Using the Standard and Poor's Compustat database that reported 7,829 observations of acquisition transactions, we found that there is a positive relationship between a firm's availability of slack resources and its propensity towards cross-border acquisition. Our results also indicate there is a positive performance implication for cross border acquisition, while, previous acquisition experience can negatively moderate for acquiring firms' subsequent acquisition behaviours. These findings provide theoretical and practical insights in explaining the reasoning behind managerial strategic decisions such as making cross-border acquisitions.
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