Call for papers: "Institutional Role, the Market for Corporate Control and Firm Performance"

For a special issue of the International Journal of Business and Globalisation.

Best Paper Award [of US$200] provided by the Guest Editors, who will judge the papers for the Award.

This special issue will focus on the promising research theme of emerging markets; or more specifically, institutional role, the market for corporate control and firm performance.

This theme is motivated by various theoretical underpinnings explored in economics, international business, strategic management and accounting literature. A common argument is that developed countries have better legal, economic and accounting practices while developing countries have not. Indeed, a country that is characterised by a liberalising environment usually attracts a higher flow of investments from the rest of the world due to better investor governance and capital protection measures (Bris and Cabolis, 2008; Lucas, 1990). In turn, a friendly, superior institutional environment not only improves economic performance but also determines the market for corporate control activities such as mergers, acquisitions, takeovers and joint ventures (North, 1990).

These long-term organisation strategies have significant impact on various aspects of firm performance, including accounting performance, marketing, operational excellence and human capital. Extant studies have found that corporate acquisitions destroy firms' values while benefitting the target firm shareholders, and that this will apply more when a firm participates in cross-border deals (Chapman, 2003; Erel et al., 2012; Martynova and Renneboog, 2008).

Unfortunately the impact of institutional environment on the market for mergers and acquisitions (negotiation and post-merger stages) is missing in the current literature. In a modest way, recent studies have drawn attention to economic nationalism and political environment in cross-border acquisitions and internationalisation processes representing both developed and emerging markets (Hassan and Ghauri, 2014; Ketkar, 2012; Lebedev et al., 2014; Reddy et al., 2014a, b; Scott-Kennel, 2013; Wan and Wong, 2009; Witt and Lewin, 2007; Zhang and He, 2014). They suggested that institutional characteristics such as legal framework, judicial system and political and cultural factors have serious impact on deal completion, especially in the international setting.

Motivated by these factors, this special issue aims to study the relationship between institutional role and the accounting performance of firms participating in local and foreign deals. Studies that conduct critical analysis, comparative observation, empirical testing and longitudinal case investigations relating to the aforementioned theme are particularly welcome. Importantly, further research must establish a coherent relation between empirical findings and extant theories. For example, do clashes between two owners in an international joint venture firm or disagreement between acquirer and target employees in the post-merger phase adversely affect overall performance of the firm?
Likewise, do changes in the ruling political party and new government formations favour the market for corporate control deals? Do stock returns around market announcements win over expectations?

Submissions researching the role of public administration and judicial systems in merger and acquisition legal processes and other institutional-related subjects are welcome. In particular, how does corruption and political interference in the host country influence the market for inbound acquisition transactions? How does a bilateral trade agreement between the host and home country affect direct international investments and acquisitions? Are friendly relations, equal economic status, similar cultural attributes and sharing the same continent really an issue in border-crossing investments? Do we have a better strategic business model for making an entry into emerging nations while overcoming institutional barriers? Overall, papers should reflect firm participation/performance with regard to corporate control deals.

References:

Bris, A., & Cabolis, C. (2008). The value of investor protection: firm evidence from cross-border mergers. Review of Financial Studies, 21(2), 605-648.

Chapman, K. (2003). Cross-border mergers/acquisitions: a review and research agenda. Journal of Economic Geography, 3(3), 309-334.

Erel, I., Liao, R. C., & Weisbach, M. S. (2012). Determinants of cross-border mergers and acquisitions. Journal of Finance, 67(3), 1045-1082.

Hassan, I., & Ghauri, P. N. (2014). Mergers and acquisitions failures. International Business and Management, 30, 57-74.

Ketkar, S. (2012). Institutional development, economic liberalisation and firm internationalisation. International Journal of Business and Globalisation, 9(4), 412-430.

Lebedev, S., Peng, M. W., Xie, E., & Stevens, C. E. (2014). Mergers and acquisitions in and out of emerging economies. Journal of World Business, In press.

Lucas, R. E. (1990). Why doesn't capital flow from rich to poor countries. American Economic Review, 80(2), 92-96.

Martynova, M., & Renneboog, L. (2008). A century of corporate takeovers: What have we learned and where do we stand? Journal of Banking & Finance, 32(10), 2148-2177.

North, D. C. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge and New York: Cambridge University Press.

Reddy, K. S., Nangia, V. K., & Agrawal, R. (2014a). The 2007-2008 global financial crisis, and cross-border mergers and acquisitions: A 26-nation exploratory study. Global Journal of Emerging Market Economies, 6(3), 257-281.

Reddy, K. S., Nangia, V. K., & Agrawal, R. (2014b). Farmers Fox theory: Does a country's weak regulatory system benefit both the acquirer and the target firm? Evidence from Vodafone-Hutchison deal. International Strategic Management Review, 2(1), 56-67.

Scott-Kennel, J. (2013). Models of internationalisation: the New Zealand experience. International Journal of Business and Globalisation, 10(2), 105-136.

Wan, K. -M., & Wong, K. -F. (2009). Economic impact of political barriers to cross-border acquisitions: an empirical study of CNOOC's unsuccessful takeover of Unocal. Journal of Corporate Finance, 15(4), 447-468.

Witt, M. A., & Lewin, A. Y. (2007). Outward foreign direct investment as escape response to home country institutional constraints. Journal of International Business Studies, 38(4), 579-594.

Zhang, J., & He, X. (2014). Economic nationalism and foreign acquisition completion: The case of China. International Business Review, 23(1), 212-227.

Suitable topics include, but are not limited to, the following:

• Institutions, culture, markets for corporate control and firm performance
• Institution and public administrations' role in corporate control transactions
• General elections, new government formation and market for corporate control
• Cross-border capital flows and greenfield investments
• Foreign acquisitions, firm performance and industry competitiveness
• Role of institutional and political factors that affect international direct investments
• International expansion, firm performance and value creation
• Cross-border participation, alliances, networks and firm performance
• Cross-border mergers, acquisitions and firm performance
• International equity joint ventures and corporate performance
• International political issues and their effect on overseas investment proposals
• Private equity investments, acquisitions and diversification
• Internationalisation through acquisition routes and firm performance
• Institutional environment and speed in the internationalisation process
• Diversification, corporate governance and firm performance
• Industry-specific studies, e.g. banking, telecommunications
• Country-specific studies, e.g. single or cross-country
• Case studies, e.g. single or multiple case analysis
• Policy-related papers that adhere to the market for corporate control

Important Dates

Submission of manuscripts: 30 September, 2015