Titelaufnahme

Titel
Private information, institutional distance, and the failure of cross-border acquisitions: evidence from the banking sector in central and eastern Europe / Sumon Kumar Bhaumik (University of Sheffield and IZA), Oluwarotimi Owolabi (Covenant University), Sarmistha Pal (University of Surrey and IZA) ; IZA Institute of Labor Economics
VerfasserBhaumik, Sumon ; Owolabi, Oluwarotimi ; Pal, Sarmistha
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, March 2018
Ausgabe
Elektronische Ressource
Umfang1 Online-Ressource (36 Seiten) : Diagramme
SerieDiscussion paper ; no. 11400
URNurn:nbn:de:hbz:5:2-153521 
Zugriffsbeschränkung
 Das Dokument ist öffentlich zugänglich im Rahmen des deutschen Urheberrechts.
Volltexte
Private information, institutional distance, and the failure of cross-border acquisitions: evidence from the banking sector in central and eastern Europe [0.41 mb]
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Zusammenfassung

In this paper, we develop an information theory-based framework about cross-border acquisitions in the financial intermediation industry. We argue that even though "soft" information embedded in customer relationships of local banks can, in principle, help multinational banks (MNBs) overcome informational disadvantage in host countries, the cost of verification of this private information may, paradoxically, make local banks with significant customer relationships unattractive for cross-border acquisition. Further, we propose that the relationship between the amount of customer information embedded in an incumbent bank and the likelihood of its acquisition by a MNB is modified by the institutional distance between the home and host countries of the MNB. Specifically, the strength of the negative relationship increases with institutional distance between home and host countries because it increases the verification cost of private information with institutional distance. Our hypotheses find support in the context of Central and Eastern Europe.