Title: The influence of financial slack resources over cross-border acquisitions

Authors: Quang Vinh Khanh Tran; Ruth Rios-Morales

Addresses: Bach Viet Engineering – Trading Company Ltd., 97A Ly Tu Trong Street, District 1, Ho Chi Minh City, Vietnam ' Center of Foreign Affairs and Applied Diplomacy, School of Management and Law, Zurich University of Applied Sciences, Stadthausstrasse 14/Office O3.52, CH-8401 Winterthur, Switzerland

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.

Keywords: financial slack resources; cross-border acquisitions; strategic decisions; international expansion; moderating role; accumulated learning; previous experience.

DOI: 10.1504/GBER.2015.066527

Global Business and Economics Review, 2015 Vol.17 No.1, pp.1 - 18

Available online: 24 Dec 2014 *

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